Greece’s Prime Minister Papandreou shocked the world, the European Union, his country, his own party and his finance minister today by upping the stakes with a referendum on the austerity measures needed for financing the country’s debt burden. It is high stakes brinkmanship whereby a loss would mean financial ruin for the country as it leaves the Eurozone or strengthens his party’s hand. This will, no doubt, raise the German ire already at a breaking point and stresses the entire negotiations. He has cleverly not set a date for the referendum as I would guess to extract further concessions from the Troika as they all look into the abyss…
The ancillary effect is that if it goes through and the Greek voters get a say on whether to accept austerity measures and stay in the union – what of the Italians, the Spaniards , the Portuguese voters. Won’t they want a say as well?? According to a recent poll, nearly 60 percent of Greeks have a negative view of the rescue deal suggesting that voters will say no.
The tangent this course of action puts this process of negotiation in a downward spiral. It usurps the power of the democratically elected leaders and slows the process down considerably. The political contagion will be fast and violent – Papandreou has opened Pandora’s box.
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