There were rumors this would be the response last night. To put it simply, they are beyond offended that Syriza wants to put something which concerns all Greeks to a referendum. This is against European values.
I find this, from the NYTimes, interesting:
The refusal by the Eurogroup to grant Mr. Tsipras the extension was the first clear sign that Mr. Tsipras and his leftist government had overplayed their hand by failing to scare the country’s creditors — wearied by months of continuous wrangling and emergency meetings — into making last-minute concessions.
This is an interesting interpretation: It’s not that Tsipras wanted a democratic mandate. Rather, it was just a negotiating ploy (though Syriza has said they’d be happy to recommend “yes” with a better deal).
I hope that Syriza has plans on how to handle what looks like a default, because Europe seems intent on making sure there is one. Certain measures, like capital controls, should be in place now.
Syriza is also being extremely foolish here:
Some Greeks said a better question would be to ask whether Greece should remain in the single currency, a scenario that most Greeks favor. But Mr. Varoufakis told a news conference that the referendum could not be about the euro because membership of the single currency was meant to be irrevocable.
“There are no provisions for exit from a monetary union,” said Mr. Varoufakis, who said the rules foresaw only departure from the European Union. “Anyone who wants us to pose that question must first change the treaties of the European Union,” he said, referring to exit from the Eurozone.
You cannot run on default and not be willing to leave the Euro, because, yes, you will be bankrupt, and you need to be able to print money. This is Syriza accepting that treaties are higher than the democratic will—essentially accepting Eurocrat talking points and ideology.
The vast destruction of default will be Syriza’s fault if they are so stupid as to default without any provisions for also leaving the Euro. Europe will not be kind, they will aim for maximum destruction to make their point that “there is no alternative” and to teach that lesson to all the other countries who would be better off defaulting.
The only non-embarassing reason I can think of is that Syriza knows they will need to go off the Euro, but feels the Greeks wouldn’t say yes. Don’t ask a question when you know you won’t like the answer to it. Even so, Varoufakis should not have used an undemocratic frame.
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CMike
In the previous thread Mandos indicated:
If this referendum is what the Prime Minister has had in mind all along he should have imposed capital controls months ago -as a shot across the EU’s bow, to notify his constituency as to how few their options had become, and to actually control what was left of the capital in Greece. There also should have been a lot more discussion about going off the Euro coming from his party by now.
Tsipras sure seems to be going about this in a reactive sort of way… unless, all of a sudden, he’s going to be able to pull a huge Russian bear out of his hat.
Jeff Wegerson
Krugman or maybe Nate Silver pointed that unsophisticated voters tend to vote for percieved strength. In this case they would percieved the Euro as a stronger currency than the Drachma. Sophistication understands that there are times when a so-called weak currency is best. So an important reason not to put the currency question to a vote
A natural state like Greece, a population sharing a geography, a language and a culture, most assuredly must be able to vote its way out of a larger community. The problem for the U.S. South was that any referendum that did not include black people would be immoral and lacking in popular legitimacy.
markfromireland
@ Ian,
Now leaving aside the fact that Americans are very cavalier about discounting other peoples’ human rights, citizenship rights, legal rights, democratic rights, political legitimacy, and so on it’s still twaddle.
What the Euro group were demanding was that the Greek government throw over their own political legitimacy by accepting an immense and savage austerity program that is an order of magnitude worse than anything they were elected to do.
Furthermore the Euro group’s demands are not being made in good faith. In 2012 the Euro group and the IMF (“the Institutions”) agreed in principle that the reward for accepting their demands for austerity would be an endgame consisting of comprehensive debt restructuring together with a roadmap for implementing it. But the Euro group have sedulously avoided even starting to talk about such a restructuring and how and when it would be implemented.
[Amazing though it might seem for once the IMF are the “least bad” amongst the creditor groups because they do at least accept that restructuring (and that will involve at the very least rescheduling to the point of write off) is necessary].
I think the NYT have it exactly backwards here it’s not that Syriza were trying to scare the Euro group it’s that Euro group’s demands put them into a situation where they had nothing to lose and everything to gain by resisting.
Any deal struck is going to mean massive losses for the Greek people. The sudden end of thousands of small and medium businesse, massive hikes on social insurance contributions, massive hikes in VAT, and massively increased unemployment. And for what? For more of the same a few months later in an endless spiral of lurching from one temporary reprieve after another. All of this is I imagine very clear to Greeks.
What isn’t clear is what happens if they refuse to knuckle under to the Euro group. The Euro group haven’t actually ever encountered meaningful resistance before. They’re not set up to handle it. They’re used to people caving in.
This is one of the few occasions when the devil you don’t know might be better than the one you do.
mfi
CMike
The problem with the U.S. South was that it controlled what was then the U.S. West’s access to the Gulf of Mexico via the Mississippi River and that elements in the U.S. South were rumbling about expanding its Slave Empire into Central America and the Caribbean. Here’s Lincoln in his First Inaugural Address:
>>>Is there such perfect identity of interests among the States to compose a new union as to produce harmony only and prevent renewed secession?
Plainly the central idea of secession is the essence of anarchy. A majority held in restraint by constitutional checks and limitations, and always changing easily with deliberate changes of popular opinions and sentiments, is the only true sovereign of a free people. Whoever rejects it does of necessity fly to anarchy or to despotism. Unanimity is impossible. The rule of a minority, as a permanent arrangement, is wholly inadmissible; so that, rejecting the majority principle, anarchy or despotism in some form is all that is left.
…Physically speaking, we can not separate. We can not remove our respective sections from each other nor build an impassable wall between them. A husband and wife may be divorced and go out of the presence and beyond the reach of each other, but the different parts of our country can not do this. They can not but remain face to face, and intercourse, either amicable or hostile, must continue between them. Is it possible, then, to make that intercourse more advantageous or more satisfactory after separation than before? Can aliens make treaties easier than friends can make laws? Can treaties be more faithfully enforced between aliens than laws can among friends? Suppose you go to war, you can not fight always; and when, after much loss on both sides and no gain on either, you cease fighting, the identical old questions, as to terms of intercourse, are again upon you.<<<
(In the North any sentiment in favor of the dissolution of the Union was strongest among the abolitionists who were enraged by the Compromise of 1850’s provision that the federal government, itself, would enforce a fugitive slave law. Other Northern whites, those who would go on to make up the majority bloc within the Republican Party at the time of the Election of 1860, were adamantly against the spread of slavery into the territories but felt little responsibility in the matter of providing any relief for the all ready enslaved.)
Dan Lynch
Agree with Ian that Syriza has been acting “foolish.” Perhaps they are playing multi-dimensional chess and will eventually pull a rabbit out of their hat, but I don’t think so, I think they are just incompetent.
Syriza’s entire platform was based on “if only we explain to the Troika how to make the EU work better, then they’ll agree to restructure our debt and reform the EU out of the goodness of their hearts and we’ll live happily ever after.” That’s it, they have no plan “B.”
There is a good chance that Greeks will vote “yes” to austerity, not because they want austerity, but because Syriza has failed to put forth a realistic alternative. There is already a run on the banks and the Troika will tighten the screws between now and the referendum. Regardless which way the vote goes, Syriza is toast.
guest
I don’t see the foolishness that Ian points out. If there is no provision to leave the Euro with or without leaving the EU, then I don’t see why that needs to be the question in the referendum, especially if the majority will foolishly think they can keep the Euro and not have austerity.
Put the question of the austerity deal being offered to the people. If they accept it, give them their austerity.
If they reject the deal, let the chips fall where they may. Most likely Greece could be forced out. The Troika is making noises and it sounds like that is what they intend to do if they don’t get their way. And if Syriza has to take steps that revive the drachma or a dual currency to deal with the results of Europe’s tantrum, then they can at least say they were forced into it. It’s sort of passive aggressive, but given the dumb ass desires to stay on the Euro, they don’t have a lot of good options.
I just hope somebody is doing what is necessary this weekend to protect the Greek financial system over the next week or two from the international banks.
I wonder if Monday and next week could be havoc all over the world if this becomes the straw that breaks the camel’s back.
V. Arnold
@ markfromireland
June 27, 2015
Essentially agree with your take.
What I see is, very intelligent and savvy players in Tsipras and Varoufakis. I have had the impression they have known exactly what is what. The IMF have shown themselves as a bankrupt lot, with no scruples what-so-ever.
I’m left wondering, however, if Greeks have a martyrdom complex; it seems this tragedy has gone on far too long.
Default and get on with life…
Tsigantes
Thank you markfromireIand and with every best wish from Greece that your wonderful nation is soon Iiberated from Germany’s KfW!
An interesting article from Zero Hedge yesterday
http://www.zerohedge.com/news/2015-06-22/goldmans-conspiracy-theory-stunner-greek-default-precisely-what-ecb-wants
This cIears up one mystery of the negotiation, since most Europeans assumed that a greek defauIt would impIode the euro. ApparentIy not.
As for Varoufakis’ statement that there are no treaty provisions for exiting the euro –
Far from being undemocratic it underscores that according to our mutuaI Eurozone treaty, Greece is an irrevocabIe part of the euro family – a supposed democratic, joint and equaI group. Ergo, it is not within Eurozone’s gift to force Greece out without Greece’s agreement and participation. Eurozone does not have any such right.
i.e. If Eurozone forces Greece out, Eurozone violates the treaty, not Greece.
Furthermore, if the Eurozone forces Greece out through an ECB decision to stop supporting Greek banks on Tuesday – that is, deIiberateIy throwing an EU/EZ member state into stark chaos – then any right to demand repayment from Greece is massiveIy undercut, and no doubt void.
The Greek coalition government of Syriza and AneI [and it is vitally important to remember that the Greek government is not a “radical Ieft” government, but a coaIition of right AND Ieft] have chosen an impeccably correct route for negotiation – I refuse to refer to this as a “game”, since it is anything but. Greece has demonstrated throughout unswerving respect to its “partners”, to the treaties, to the ruIes. This meant avoiding any “popuIist” or “fear mongering” discussion of defauIt – consider how the international propaganda machine wouId have instantIy spun that, accusing Greece of bad faith. Greece has negotiated every step of the way in impeccable good faith. That EU, IMF, ECB and Eurogroup have chosen a different route, refusing to negotiate in kind and according to the treaties, and insisted on “conditionaIities” [eurospeak] that violate the treaties is their own responsibility. The Institutions, have chosen to reveaI themselves to the citizens of Europe as not onIy untrustworthy but dangerous. Their iIIegaIityand bad faith have been exposed.
One day – soon perhaps – the Greek government’s impeccability in this matter is going to become vitally important.
Mandos
Ian: I sent it to you. 🙂 Whew!
Mandos
Then he would have had to have held the referendum much earlier, and without the argument that it *isn’t* him who is being recalcitrant or negotiating in bad faith.
Of course, I’m not saying that he *did* game it out this way, and probably he didn’t. But if he had, I’m not sure that I would agree with your argument.
V. Arnold
@ Mandos
June 28, 2015
~~~~~~~~~~~~~~~~~~~~~~~
Ditto. Varoufakis is known for his expertise in game theory;
http://www.businessinsider.com/greece-yanis-varoufakis-using-game-theory-2015-2?op=1
Tsipras and Varoufakis are, as stated above; are very astute “players”, by no means fools. And yet we have MSM beebling their ignorant opinions trying to second guess actually intelligent people; how amazing is that? Rhetorical, sorry…
We’ll see, no…
Peter
Those who are lining up behind Syriza and defending this referendum as a legitimate expression of democracy and the Greek popular will may want ask themselves what they would say if the rest of the EU announced a snap referendum among their peoples on the question of whether they should offer Greece more generous terms.
V. Arnold
This is well worth a read, The Automatic Earth;
http://www.theautomaticearth.com/2015/06/i-fear-the-greeks-even-when-they-bring-gifts/
Ilargi just moved there yesterday.
Stirling Newberry
Europe is violating a fundamental pretext of democracy, that any legislature should be able to over turn what some previous legislature did, though at an equal level (for example to undo a constitutional amendment requires a constitutional amendment). Europe does not want this basic principle of democracy to exist, which means they want some form of totalitarianism, Though it is name does not exist yet.
We are living in a prewar not postwar epoch.
Pelham
I just finished a book, “Injustices” by Ian Millhiser, that makes a pretty good case that the function of our Supreme Court over the generations has been mainly to thwart representative democracy any time it rears its lovely head, using constitutional, unconstitutional or any fly-brained reasoning that might pop into the justices’ hoary, unaccountable heads.
The governing institutions of the EU and the ECB serve much the same purpose in Europe.
Pelham
@Jeff Wegerson
Re: “A natural state like Greece, a population sharing a geography, a language and a culture, most assuredly must be able to vote its way out of a larger community. The problem for the U.S. South was that any referendum that did not include black people would be immoral and lacking in popular legitimacy.”
Agreed about Greece. But I’m wondering whether there’s a problem with your statement about the South. Was secession back then (as opposed to how we see things today) regarded as an accurate expression of Southern popular will — even if Northerners thought it shouldn’t be permitted?
If it was so regarded then, it’s at least arguable that the South should have been allowed to go its own way. But, then again, that may be seeing it through our present-day lens — although I believe international opinion on the subject in the 1860s was mixed.
Peter
I don’t know who is using the same name as me but it is not I. Doesn’t the comment software screen usernames for duplication?
In answer to my doppelganger’s question, the PTB in Europe or the US would never allow the Unwashed Masses to make important decisions, that power is reserved for those who have long known what is best for those they rule.
markfromireland
@ Tsigantes June 28, 2015
Interesting article if true. It certainly is true that a growth and stability pact which is what the EZ has is not the same thing as inter-regional transfers made by a central government. It’s also more than likely that Spain and Portugal followed by Italy and then France would be vulnerable.
mfi
CMike
Eleven states seceded to form the Confederate States of America, including the four that did so only after the firing on Fort Sumter and Lincoln’s call for 75,000 troops. Among those four states, which might be seen as the least enthusiastic about leaving the Union, were the two most populous states of the Confederacy, Virginia and Tennessee. Those two states required their Ordinances of Secession to be ratified by referendum, Virginia’s was supported by a 3 to 1 margin, Tennessee’s by a 2 to 1 margin [LINK].
Jeff Wegerson
@pelham @cmike. A legitimate referendum in the south would have to include the ability of slaves voting. I can only imagine how that would have gone.
CMike
JeffWegerson,
I don’t know, Virginia and Tennessee were pretty democratic as far as those things went by the global or even by the European standards of 1861.
Jeff Wegerson
CMike,
European standards of 1861? England effectively banned slavery around 1750. There is the argument that the U.S. revolution was a preemptive attempt by the south to prevent the judicial ruling in England that foreclosed slavery from being applied in America. That would be one standard that the U.S. lagged on.
But my response was clearly a backward looking answer to an important reason why ultimately the south’s secession was at certainly immoral and at maybe even illegitimate. It could point to a potential situation where today a referendum by a Mexican border state to secede could be seen as illegitimate if it did not include undocumented voters.
CMike
JeffWegerson,
You’re right, the U.K. was out in front of the U.S. on the issue of slavery beginning with that 18th century ruling in Somerset. Of course, there was still the (no pun intended) lion’s share of the work for them to do in front of them. Wikipedia says [LINK]:
The Act had its third reading in the House of Commons on 26 July 1833, three days before William Wilberforce died. It received the Royal Assent a month later, on 28 August, and came into force the following year, on 1 August 1834. In practical terms, only slaves below the age of six were freed in the colonies. Former slaves over the age of six were redesignated as “apprentices”, and their servitude was abolished in two stages: the first set of apprenticeships came to an end on 1 August 1838, while the final apprenticeships were scheduled to cease on 1 August 1840.
The Act provided for compensation for slave-owners who would be losing their property. The amount of money to be spent on the compensation claims was set at “the Sum of Twenty Millions Pounds Sterling”….
In the matter of U.K. democracy, Wikipedia says [LINK]:
The Representation of the People Act 1867, 30 & 31 Vict. c. 102 (known informally as the Reform Act of 1867 or the Second Reform Act) was a piece of British legislation that enfranchised part of the urban male working class in England and Wales for the first time.
Before the Act, only one million of the seven million adult males in England and Wales could vote; the Act immediately doubled that number. Moreover, by the end of 1868 all male heads of household were enfranchised as a result of the end of compounding of rents. However, the Act introduced only a negligible redistribution of seats….
Ian Welsh
The number one force for ending the Atlantic slave trade was the British Navy.
MFI once suggested using current navies to end overfishing, I suspect he’s right that Admirals and Captains would /love/ that. Give them something to do, and lots of independent commands.