The overwhelming No vote in the Greek referendum marks the beginning of the end of the euro. There will be short-term twists and turns, a deal here and a deal there, but the single currency as originally conceived is challenged beyond recovery.
A referendum in which voters from one country assert their right to adopt policies incompatible with their obligations as a member of the euro is the fatal ingredient, exposing tensions between electorates, individual governments and the rules governing membership of the euro that cannot be eased. A eurozone with many countries depended either on political union and a cultural embrace of such integration from all members, or a determined ambiguity in which tensions were largely hidden and rules overturned – in essence, a eurozone busking it. So far the second route has been taken, but the referendum blocks much further travel.
One short sentence from the Greek Prime Minister, Alexis Tsipras, highlights the conundrum of the eurozone and, in its contorted emotiveness, makes the situation worse. After the overwhelming No vote, Tsipras declared: “Democracy cannot be blackmailed.” Although he and most of his voters want to remain part of the euro, those four emotive words are a death knell.
Democratic will is unavoidably compromised by membership of a currency shared by other countries with incomparably different economies. The obligations are not a form of blackmail, but they can and sometimes do challenge the democratic wishes of a single country.
In the short term, the poll gives Tsipras authority within his country and shows to the seemingly ruthless number-crunchers in Germany that Greek voters will not put up with austerity being imposed upon them. But referendums unleash emotions that soon undermine the leaders who call them. The other pivotal moment in the last 48 hours was the euphoric reaction on the streets of Athens late on Sunday night. “No, No, No,” chanted those who were on the winning side. Referendums give voters an artificial sense of empowerment and can formalise a previously vague sense of nationalist assertiveness against a perceived enemy. Look at what happened after the referendum in Scotland. Animated by the referendum campaign, Scottish voters were not going to be told what to do by “London” any longer. Greek voters are not going to be bossed around by “Germany”.
In staging a referendum, Tsipras has generated a sense of empowerment that he cannot meet. He may return from negotiations over the next few days with a better deal, but it will be one that still demands huge sacrifices among those who suddenly feel defiant.
If he wants to stay in the euro, Tsipras will have to tell voters that he has signed up to a package marked “almost Yes”. Referendums are valuable devices for leaders when they propose them, but leaders often lose control, either during the campaign or in seeking to make sense of the result. David Cameron may discover this for a second time as he seeks absurdly to renegotiate the UK’s membership while the eurozone is in a state of wild flux.
Angela Merkel is seen as the key both in relation to Greece and the UK. But she too is constrained by her electorate. If Germany held a referendum as to whether Greece should stay in the euro there would almost certainly be a No vote as big as the one that was announced in Athens. Merkel may seem resolutely unreasonable in relation to Greece, but she is a softer version of her electorate, to whom she is accountable. The euro can only work if German voters regard Greece as part of the same entity as themselves and Greek voters see Germany in a similar light. Evidently they do not.
In such a highly charged crisis the temptation is to seek out heroes and villains. Sadly, there are no heroes. For all of Europe this is as grave a crisis as the global financial crash in 2008. Then, Gordon Brown and the newly elected Barack Obama at his most mesmerising rose fleetingly to the challenge. They instigated a fiscal stimulus that dragged economies back from the cliff’s edge. Even Merkel was persuaded to act against her instincts to give Germany a spending boost. Now there are only smaller players trying to make sense of it all.
The Greek voters are not heroes either. Like most electorates across the world, they seek contradictory objectives. The flawed Greek government is partly to blame for the contradictions, holding out the false hope of a separate economic policy decided by voters and continued membership of the euro. In Germany, some of those pulling levers do so with brutal insensitivity.
But there are no villains. Leaders act in the way they do partly because they have no choice other than to do so if they want to remain in power in their own countries. Meanwhile, voters always want the best of both worlds. In the UK voters, seek US levels of taxation and European public services. In the next five years they will discover they cannot have both.
If this is a saga with no current heroes or villains, it is one where there will be many victims, well beyond Greece. What will happen when voters in Spain, Portugal and Italy decide they would like to decide their economic policies too? When, having decided to be assertive, they find economic policy is not entirely in their control whether they are in or out of the euro?
Perhaps the euro will continue for a little longer in its current size. But the crisis in Greece shows that political union cannot follow monetary union. Voters look to the governments they have elected to follow economic policies that they consider to be in the interests of their own countries even if those governments are doomed to fail.
When the Greeks chanted “No, No, No”, they were nowhere near as empowered as they felt – and yet they were moving history in a new and precarious direction.
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