After the Greek referendum

History in the Making

The outcome of the referendum is clear. Now more than ever it’s up to the ECB, alongside the Greek government, to come up with solutions.

Merkel says no – at least in this street painting in Frankfurt/Main.  Foto: reuters

This „no“ from the Greeks is sensational. It will write history, although what will come next remains unclear. What is already clear is that this „no“ will be received as a provocation by european leaders. It can now only be hoped that they won’t react hastily and mount a Grexit.

The message from Greek premier Alexis Tsipras was unambiguous – he did not push for a ‚no’ because he wanted to leave the eurozone, but rather because he hoped that he might thereby force the troika into concession-making. After all, up until now the „Institutions“ haven’t budged. They submitted to Tsipras the same austerity targets that they submitted to his predecessor, Samaras.

It’s been obvious for some time that the troika’s rigid austerity measures aren’t working, but are instead dragging the country deeper into the crisis. There clearly is plenty of room for the eurozone to make concessions without immediately abandoning the course of the reforms, though.

The eurozone would therefore be well advised to finally show the Greeks some good will. It wouldn‘t even be difficult to save face while doing so. The present austerity targets, amounting to some eight billion euros over the next two years, could be formally insisted upon, but counterbalanced with a guarantee of investments of the same sum.

There would be enough worthwhile projects; it is for instance inexplicable that Greece still imports oil and doesn’t draw on sunlight and wind – both of which are in bountiful supply – for energy. However, the risk is enormous that dogmatism will win over rational thinking, and that the European leaders will have no interest in affording Tsipras some kind of triumph – preferring instead to orchestrate a Grexit.

From a technical standpoint this would be easy; the European Central Bank need only further freeze its emergency credit to the Greek banks, or even demand immediate repayment. Without enough euros to conduct normal financial transactions, Greece would have to switch promptly to a parallel currency.

Over time, European leaders consistently insisted that a Grexit would pose no danger. That was a bald lie. The risks are impossible to predict, and it would be highly probable that, when the next crisis comes, the next Euro country would be on the block – simply because the financial markets would bet on it. That is how world history looks.

Translation: Hans Kellett