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Greek Prime Minister George Papandreou has called off plans for a referendum on the proposed bailout package for Greece’s crippling sovereign debt but this has not shored up support for the embattled Socialist Prime Minister as his government is now expected to collapse in a confidence vote this Friday. The opposition New Democracy Party backed the loan bailout agreement, signaling a change from previous stances in opposition to the bailout package. With the referendum cancelled, finance minister Evangelos Venizelos had confirmed plans to have the bailout package voted on by Greece’s 180 member parliament in the event that Papandreou survives the confidence vote on Friday. The finance minister has since defected from Papandreou’s side, causing chaos within the ruling Pasok bloc.

 

In other surprising news, the Prime Minister dismissed head senior military officials and replaced them with those thought to be more aligned with his goals. This dismissal has sparked massive protests and has been decried by the opposition New Democracy party who have accused Papandreou’s government of lacking legitimacy given the holding of a confidence vote tomorrow. The moves have been speculated as heading off a potential overthrow of the government. Greece is no stranger to military rule, having lived under the grip of a junta during the years 1967-1974. The latest reports from the Guardian suggest that Greece is heading for a general election over membership in the euro and Papandreou’s government will collapse. Some veteran members of his own party have called on Papandreou to assemble a unity government to at least pass through the bailout package.  Heather Horn, writing for The Atlantic, sees a nation-state’s revival of its ‘lost sovereignty’ in Greece’s recent actions which have thrown the eurozone into chaos and effectively held markets and banks hostage for weeks now. Horn’s assertion of the reemergent sovereign state is an interjection of hard realism in a world that has heretofore become increasingly imbued with a sense of the inevitable expansion of the cosmopolitan idea of the international order.

 

The criticism that has always plagued the European Union is that it is a bureaucratic entity rather than a democratic one. As such, the EU’s structural incentives promote consensus and controlled outcomes, norms that are quite the opposite of the somewhat chaotic world of democracy. To quote Heather Horn: “Referenda have plagued the European supranational structure for years. In 2000, a referendum in Denmark rejected the euro. In 2001, Ireland held a referendum on joining the EU, which failed with a shockingly low turnout (they later joined). A new EU constitution — ‘three years in the making,’ the BBC reminds us — was scuttled in 2005 after failing to win referenda in France and the Netherlands. More recently, Ireland failed to ratify the Lisbon Treaty in 2008. After some modifications, it passed on the second go-round.” Indeed, just as recently and related to the Greek crisis, tiny Slovakia held the eurozone hostage over its potential rejection of an expansion of the European Financial Stability Facility. Whatever the case, Greece’s rejection of the eurozone backed bailout will spell dire consequences for it economically and nationally. If they do choose to abandon the euro, Greece will be effectively cutoff from assistance from the eurozone and will face economic chaos. The Telegraph reports that, failing an injection of bailout funds, Greece will be unable to pay its state workers. As discussed before, Greece already has a hard enough time collecting taxes from its own people given the current state workers under its employ, so the government is not the most robust institution regardless of bailout money. The greatest risk from the Greek debacle is that of financial contagion, with many analysts fearing the effect a Greek exit from the euro will have on Italy and the other fragile economies in the eurozone.

[The Telegraph]

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