Greek Referendum: Euro Crisis Explodes into Dramatic Climax

June 30, 2015

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Those who accuse the Greeks of “recklessness” are mistaken: the creditors’ utter contempt for democracy left them with no other choice but a rupture.

The announcement struck like a bombshell.

Tsipras’ spectacular decision late on Friday to fly back to Athens and put the Eurogroup’s final bailout offer to a referendum — with the government advising voters to reject the deal — has stunned friends and foes alike.

Now, with depositors lining up at ATMs to withdraw cash, the Eurogroup refusing to extend the current bailout program, the ECB capping its emergency liquidity assistance for Greek banks, and Greece set to miss a €1.5 billion IMF payment on Tuesday, the long-awaited endgame is finally upon us. After five long and exhausting years, the euro crisis has exploded into its dramatic climax.

Those who now lambast the Greek government for its supposed “recklessness” in calling the referendum are profoundly mistaken. Yes, as I have argued many times before, Tsipras’ and Varoufakis’ belief that they could somehow extract an “honorable compromise” from the creditors was always extremely naive. But in the end it was the creditors’ utter contempt for democracy that pushed Tsipras with his back against the wall, forcing him to sign up to an agreement that they knew would split his ruling party and government.

Deliberately tabling one outrageous proposal after another, the creditors’ intention was clear from the very start: they were never even remotely interested in any positive “deal”; the only thing they would settle for was Syriza’s complete and total surrender — ideally followed by technocratic regime change inside Greece. Paul Krugman was therefore entirely right when he referred to the creditors’ ultimatum as “an act of monstrous folly.”

Backed into a corner by the virulent moves of the Eurogroup and the IMF, Tsipras responded in the only sensible way: he rejected the absurd proposal that the creditors had put on the table, took the decision to his people, and advised them to vote against the creditors’ disastrous ultimatum. What is surprising is not that he made this move per se — but that it took him so long to do it.

For five months, the creditors suffocated Greece, depriving it of all liquidity in a brazen attempt to force Tsipras to sign up to humiliating concessions that would have condemned the Greeks to years — if not decades — of extreme austerity. For five months, they doubled down on their cynicism and steadfastly refused to make even the most minimal concessions. For five months, they publicly belittled and degraded the democratically-elected representatives of millions of Greeks who had already suffered untold hardship.

If Tsipras had signed up to this unacceptable deal, it would not only have meant political suicide for him and his party; it would also have spelt an unmitigated disaster for the Greek people — not to mention the lasting damage it would have inflicted upon the political prospects of the European Left more generally. If there’s anything reckless about Tsipras’ approach, it’s that he even let the creditors get this far to begin with.

It was high time for the Big No — the resounding OXI!

For five years, European leaders and Greek elites sacrificed this beautiful country and its exceptional people at the altar of the financial markets to save a handful of reckless speculators inside the European banks and to convince international investors that the monetary union was irreversible. For five years, they punished the Greeks for a deep-rooted structural crisis they had no part in creating. For five years, they kicked the can down the road, hoping that the fundamental contradictions of financialized capitalism and the European monetary union would somehow magically disappear if only the inevitable moment of reckoning could be indefinitely pushed into the future.

This approach has now been exposed as a catastrophic but utterly predictable failure. Doubling down on their extreme positions with the malicious intent of forcing the Greeks into a self-defeating deal or disorderly exit, it was the creditors themselves who brought the Eurozone to the brink. Of course they will boast that Greece has long since been “ring-fenced” and that the fallout of a Greek default can now be contained, but investors will draw their own conclusions when they see a full-fledged member of the Eurozone descending into chaos. It is no surprise that the euro is already tanking in the Asian markets.

The gravest irony is that, all this time, there was a very straightforward and socially acceptable way out of the deadlock. The sensible solution would have been to write off a significant chunk of Greece’s debt. But, as even the IMF has since officially admitted, this option was politically unpalatable to Greece’s “partners” from the very start. In the early years, the Europeans feared that a debt write-down would lead to the collapse of some of their biggest private banks. Now that Greece’s debt has effectively been socialized, these same European leaders fear an electoral backlash from their Euroskeptical taxpayers, who now stand to bear the brunt of the impending Greek default.

In other words, it was the very intransigence of the creditors, the utter unwillingness to tell their own voters the truth about the Greek bailout and their stubborn refusal to even contemplate a sustainable and socially just resolution of the crisis, that led us to this dramatic apotheosis.

Greece and Europe now find themselves on the eve of a rancorous rupture. At the start of a week that will undoubtedly go down in history as a make-it-or-break-it moment for Europe’s ill-fated neoliberal project, the skies over Greece are already darkening. A full-fledged bank run over the weekend forced the government to keep the banks closed on Monday and to impose an ATM withdrawal limit of 60 euros per day. The knock-on effects on the economy and society will make it very difficult for the Greeks to vote in peace.

In this respect, the creditors’ intentions are once again crystal clear: shocked and outraged by Tsipras’ unexpected move, they will do everything within their power to obstruct the democratic process and influence the outcome of the vote. Their goal won’t even be to keep Greece inside the Eurozone anymore; their number one priority right now is simply to prevent Syriza from being able to publicly claim a victory — for that would risk emboldening other anti-austerity forces across the continent, most significantly Podemos in Spain. They would rather see Greece go down in flames than cut Syriza some slack.

This is why the Eurogroup refused to extend Greece’s current bailout program, not even for a few days: they knew the ECB would not be able to maintain its emergency support of the Greek banks without such a program, and they knew that without this support the Greek banks would not be able to open on Monday. This, in turn, would force the Greeks to vote under conditions of extreme financial uncertainty, emboldening the terror-campaign of the neoliberal opposition and possibly skewing the vote in favor of a fear-induced yes.

Meanwhile, the unelected wing of the Troika technocracy has taken the trolling to a whole new level. IMF chief Christine Lagarde argued that, since the creditor offer expires on Tuesday, Tsipras is technically asking his people to vote on a deal that no longer exists anyway. European Commission chief Jean-Claude Juncker added on to this by releasing a new proposal that was supposedly in the works before the Greeks “unilaterally” walked out of the negotiations. Both moves are clear attempts to destabilize popular expectations ahead of the vote and confuse the electorate about the clarity, legality and historic significance of the choice that now lies ahead of them.

Make no mistake: Sunday’s referendum will mark a defining moment in Greece’s modern history and a decisive turn for Europe’s neoliberal project. The choice is very clear. Five years after the people of Greece first rose up against the anti-democratic imposition of the Troika’s austerity measures, they have finally been given the chance to decide upon their own destiny: either they will vote yes to a lifetime of austerity within the eurozone, or they will roar back at the creditors’ inhumane demands with a proud and resounding “NO!” — thereby opening the way for a thousand yeses to a new, democratic and socially just Europe, freed from the shackles of debt servitude, the noose of a deflationary single currency, and the tyranny of an unaccountable financial technocracy.

The stakes have never been higher.

Jerome Roos

Jerome Roos is a PhD researcher in International Political Economy at the European University Institute, and founding editor of ROAR Magazine. This article was written as part of his regular column for TeleSUR English.

Tags: austerity policies, Eurozone breakup, Greek economic crisis, Syriza