The Return of Politics (continued)

by Andrew Stuttaford


Via Reuters: 

Reuters) – Germans expressed fury and frustration at Greek Prime Minister George Papandreou’s shock decision to call a referendum on the latest aid package, with some saying the gamble would push Greece out of the euro zone.

“You can’t help thinking that they should be grateful as Europe is trying to help,” said Konstanze Pilge, a 26-year old student, walking near the Brandenburg Gate in central Berlin. “Now it looks like they are going to mess things up.”

Papandreou dropped his bombshell on Monday evening, less than a week after European leaders agreed the outlines of a second bailout for Athens.

“It just goes to show once again what a huge mistake it was not to throw Greece out of the euro zone at the start,” said Wolfgang Gerke, a banking professor and president of the Bavarian Financial Centre think tank.

Europe’s paymaster Germany and its partners in the euro zone were taken by surprise by the announcement.

Rainer Bruederle, parliamentary leader for Free Democrats (FDP) who share power with Chancellor Angela Merkel’s conservatives, suggested Athens was trying to wriggle out of the 130 billion euro bailout deal, which demands harsh state spending cuts from Greece in exchange for aid.

“I was irritated (by the news), Bruederle told Deutschlandfunk radio. “That’s a strange way to act.”

Papandreou said he needed wider political backing for the measures following a wave of strikes and defections of lawmakers in his party.

A poll over the weekend showed nearly 60 percent of Greeks have a negative view of the rescue deal, suggesting that voters in the referendum, which is likely to be held early next year, would say no to the rescue package.  

I cannot blame Papandreou: To push Greece much further down the route of austerity without some definitive measure of popular consent behind it would be to run immense social and political risks. Now this precedent has been set however, maybe long-suffering taxpayers in Germany, Finland, the Netherlands and elsewhere should be given a referendum too. Nope, not going to happen.

As to how this all will spin out, predictions are extremely perilous at this point, but if I were a depositor in a Greek bank, I would be looking at the Argentine crisis of 2001 and, in particular, the corralito and the corralón, and I’d be feeling very nervous.

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