Thomas Molloy: Greek referendum plan causing havoc in Europe
Greece's Prime Minister George Papandreou
Q: So the Greeks are going to have a referendum. What's the fuss? Sure don't we have them all the time?
A: This is a little different. Absolutely nobody saw this coming. Greek prime minister George Papandreou announced it on Monday night without telling a soul in advance -- not even his finance minister. Naturally, everybody is now speculating madly about his motives.
Q: Well, I can see that he's not going to be flavour of the month but surely the poor Greeks deserve to have some sort of say over the default and all the other things that have been agreed?
A: I'm afraid democracy has never really been the European Union's strong point, or indeed a Greek strength for that matter. The Greeks haven't had a referendum since the 1970s, when they shook off the general who used to run the place, so this one looks a little odd. With every passing week, another country begins to flex its democratic muscles. The prospect of 27 nations suddenly deciding to go Irish and hold referendums at the drop of a hat terrifies the people who run Europe. We are already beginning to make the United States look like a model of streamlined government and that really takes some doing.
Q: So when will the Greeks vote? I don't think I can bear many more headlines about Greek tragedies. Besides, I always found all those adventures in the 'Odyssey' faintly tedious and this is even worse: one story after another about impossibly large sums of money and people with unpronounceable names. There's no romance, no Helen of Troy or Penelope.
A: Everybody thinks their own era is unromantic. Papandreou wants a poll in January but no wording has been suggested yet so we don't know what it will be about. Opinion polls show that around 60pc of the population doesn't like the deal agreed last week. But politicians from every corner of Europe know that the question will determine the outcome. Most European politicians think the question should run along the line of "Do you want your country to go bust and everything you own to become valueless?"
Q: What happens if the Greeks vote 'No'?
A: Nobody knows. Jean-Claude Juncker, the Luxembourg prime minister, refused to rule out suggestions yesterday that a 'No' vote would mean bankruptcy for Greece: "I cannot exclude that this would be the case, but it depends on how exactly the question is formulated and on what exactly the Greek people will vote on," was how he put it. A senior German parliamentarian called Rainer Bruederle suggested the eurozone might cast Athens adrift, cutting off its aid lifeline and allowing the nation to default on its huge debts. "This sounds to me like someone is trying to wriggle out of what was agreed -- a strange thing to do," was how he put it.
Q: How have the Greeks themselves reacted to the news?
A: Not well. One member of Papandreou's party has quit, bringing the government's majority down to two. Others are calling openly for him to quit and six of them want a government of national unity, which would mean a coalition between Papandreou's socialists and the conservative party, which did so much to create the mess in the first place. The administration could collapse at any moment.
Q: Golly. Sounds like the last days of Brian Cowen's government to me.
A: Papandreou's not likely to compound things by going on the radio after a night throwing plates against the wall and drinking ouzo but I think you've got the right picture. This government doesn't have much time left.
Q: What about the rest of Europe? You don't have to be a mind reader to guess that Chancellor Merkel won't like this latest Greek gift?
A: She hit the roof and so did pretty much everybody else. Merkel and Sarkozy have ordered Papandreou to come to Cannes today. But it's not just the Germans and French. Our own Lucinda Creighton called it a "grenade" while Swedish foreign minister Carl Bildt said: "It's difficult to see what the referendum is going to be about. 'Do we want to be saved or not?' Is that the question?"
Q: Why Cannes? Are they planning on reviewing a film together?
A: There's a big summit of the world's 20 most important countries starting there tomorrow. Angela and Nicolas are going to feel fairly embarrassed in front of all their fellow heads of state. This was meant to be the summit where everything was wrapped up. Instead, it is the summit where everybody gets to see that you can't trust Europe to do anything right. It was also the summit where the Europeans were going to try and coax the Chinese to pony up for Europe's bailout. Not much chance of that anymore.
Q: What about the financial markets -- we hear endlessly about how they hate uncertainty. They can't be enjoying this much?
A: They are going nuts and will continue to go nuts until this thing is solved one way or the other. The euro fell nearly three cents against the dollar. Italy's borrowing costs jumped to levels that proved unsustainable for us and Portugal last year. The Athens Stock Exchange suffered its biggest daily drop since October 2008.
Q: It makes sense that Greek shares should fall but why are the Italians up with us and the Portuguese?
A: Italy is in the markets' crosshairs right now. Ireland did okay, strangely. The ISEQ fell 4.3pc on the Dublin stock exchange and our bond yields behaved reasonably well. It seems the markets have other worries at the moment. It's a case of head down and let the others take the flak.
Irish Independent
