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FACTDROP: Greece Crisis: It's now clear that opinion of Greek citizens irrelevant to the people who run Europe


Greece Crisis: It's now clear that opinion of Greek citizens irrelevant to the people who run Europe

Πηγή: The Economic Times
Nov 4 2011

The fundamental nature of European governance is about to change.

Either a large part of the Continent will move much closer to a federal government, with common fiscal policies and a substantial loss of sovereignty for many nations, or it will spin apart, with possibly severe economic and financial consequences.

That has been clear for months, and markets have alternately soared and plunged as it appeared Europe was closer to or farther from reaching the first alternative.

This week, it appeared that the prospect that scared European leaders the most was the specter of democracy. When the Greek prime minister, George A. Papandreou, proposed a referendum on whetherGreece would go along with the agreement reached at the European summit meeting last week - one that calls for more austerity and that polls say is unpopular with most Greeks - much of Europe reacted with shock and alarm. How dare he do that?

In the end, he could not persuade his own government, and there will be no vote. That should be a cause for sorrow in the rest of Europe, not joy. There is little reason to think that Greek citizens will be more cooperative now that it has been made clear their opinions are irrelevant to the people who run Europe.

It is not only the Greek people who should be consulted about the major changes now under way in how they are governed. So should the people of other countries.

Heretofore, the countries that joined the eurozone did so with the understanding that they could have the best of all worlds - the convenience of a common currency without the economic and political integration that would inevitably be needed if the countries did not pursue similar economic policies. That understanding was wrong.

For Greece, no alternatives look good. The latest European bailout package does make some gestures toward promoting economic growth, like a program of loans for smaller businesses, and it allows Greece to escape paying some of its debts. But mostly it calls for sacrifice and austerity for years and years.

The alternative, with a loss of European support, could be worse. Greece would have to get by on its own resources. It could default on its debt and devalue its suddenly resurrected currency, the drachma. Eventually, that might lead to economic growth, but in the meantime there would still be austerity. Without access to outside capital, Greeks might have to pay for their own government, through taxes.

Referendums are seldom a good way to deal with complicated issues, but this might have been an exception. The same polls that say most Greeks want to reject the latest demands from Europe also say that a sizable majority wants to stay in the eurozone. A properly phrased question could have forced Greeks to face unpleasant realities. An adviser to Papandreou was quoted early this week as saying he wanted voters "to take a position, to see the choice before us in its starkness, hoping they will back the lesser of two evils, instead of letting irate reactions in the streets dominate the debate."

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