November 1, 2011

The Greek Prime Minister wants to hold a referendum on the new bailout deal to be signed with the Europeans. It appears that this was an unexpected move which has caused anger throughout the Eurozone (also here). The details are not yet available, but it seems that Greece will negotiate the rescue plan first, and then will put the proposal to a vote. The Greek people will decide if they agree or not.

To be honest, I thought that this was the best piece of news (for Greece) to come out recently. Negotiations thus far were a two-party game, which has now been forcibly turned into a three-part asymmetric game:

  1. The Greek Government who are on one side of the negotiating table,
  2. The EU, ECB, bankers, IMF, etc. who are on the other side of the negotiating table, and
  3. The Greek people who are voting on the outcome when negotiations are complete.

Now one has to only think: whose negotiating power increased immensely and whose negotiating power took a dive, when the third party entered the game. Yes, it is the Greek government who now drive the process.

Also, it is worth remembering that what Eurocrats fear most is democracy. The history of referenda on EU policies is not stellar, and I suspect that they really don’t want to lose this one. It will not surprise me if Greeks get away with an 80% uniform haircut including the ECB, and bank recapitalisation for free.

Unlike what Greek commentators keep repeating, Greeks have the option to say No: a standard EU policy is to keep having referenda until a Yes vote is won, giving more and more sweeteners in the process.

PS: All is not clear sailing though. A requirement is that the Greek government will maintain its slim majority until January, which is not certain. Another Greek MP resigned today, most probably because of the referendum proposal itself. The opposition leader does not want to hold a trump in his hands, and promises to stop the referendum at all costs.

The chance of Greece descending into a chaotic horde of witch hunters has gone up by another notch.


5 Responses to “optimism”

  1. Anonymous Says:

    it seems like you are talking on behalf of the American interests (the forth hidden player)…..

    • visnumerorum Says:


      The negotiators are fixed: Greece – EU.
      The voter is also fixed: Greek public.

      Hidden actors and other beneficiaries will always exist, and nobody can ignore that.

      But the only voter is the Greek people, and they have the chance to decide in their own interests democratically. If their best interests align with the US, Chinese, Brazilian or Russian, this will should not affect their vote.

      Having said that, I am not sure what American interests you are referring to. I suspect a stronger rather than a weaker Euro. A weak Euro (from a trade point of view) will probably benefit the Germans, in my opinion.

  2. asfal Says:

    You base your argument on the assumption that the greek govt has negotiating power, which is supposedly increased because of the referendum threat. I think we ve lost any negotiating power long time ago and the Europeans are close to just let us go and accept the consequences (which could admittedly be severe for the whole system). I am afraid we are past the point of policymakers making decisions of the type “too big to fail” or “keep Greece in the EZ at any cost because of contagion”. Rationality will not prevail – these are politicians we are talking about. I totally agree with your last sentence though. Thanks for your comments.

  3. Gray Says:

    It’s a yes or no question, there won’t be any additional sweeteners. Merkel has already gone much further than was politically comfortable for her, it’s really the end of the line for Greece. The Bundestag won’t support more generous plans. And without the Germans paying for the rescue, the EU can’t do anything. It’s either yes to the plan for the Greeks, or default and not a single cent from the EU!

    That’s the choice. A very easy decision, in a way, clear cut alternatives which both come with unpopular conseqiences. Regardless how the voters decide, they will have to live with it. Imho it’s good to leave it to the people to make that decision of national importance. That way, nobody can seriously argue he didn’t have a choice. It’s high time for more responsibility, and the ned of the stubborn denial!


Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: