We have been here already.
In 2011, then-Prime Minister Papandreou, facing a poll defeat and without the courage to take the decisions needed to save the country from a huge deficit (brought about by Mr Papandreou’s own spending on glory projects) called for a referendum.
The harsh bailout deal survived; Mr Papandreou lost his job.
Ever since he won the Greek elections earlier this year, Greek the Premier had one ace card up his sleeve: he gambled on the disruption to the European economy were Greece to exit from the euro. He reckoned that this threat would force the rest of Europe to give in and prefer to ‘pretend and extend’ by giving in to the Greek demands and allow the Greeks to get away with it.
All through these months, as meeting after meeting was held, as ministers and prime ministers dropped everything to rush to Brussels for yet another meeting, the Greeks fed their interlocutors with vague promises that, on close examination, amounted to nothing much. Time and again, the Commission beancounters found the Greek proposals missing and lacking in substance.
After so many meetings, and with time drawing ever nearer, the eurozone member states, Malta included, became angry and exasperated with the Greek dilatoriness and Byzantine and arcane reasoning.
Other countries – Ireland, Portugal and Spain – had been there or almost there, but they understood what needed to be done and took the medicine, bad though it may have tasted. As a result, they are now well on their way to safety.
But not Greece. On the contrary, the Greek voters last election voted heavily to reject the austerity and blamed Germany and the rest of Europe for the punishment inflicted. They voted for the party which promised to reverse the timid moves by the preceding government to restore the country’s finances. They voted to reverse privatisation, to reinstall the people who had lost their jobs from the hugely inflated civil service, to reverse the cuts in social assistance and in pensions, etc.
Even this, however, did not improve the country’s economy. On the contrary, as the government squeezed local authorities and all other sources of cash it could lay its hands on, the economy sped south. Huge sums were withdrawn from the banks, suppliers to government were not paid, and private businesses found it difficult to conduct business, both import and export, as overseas suppliers were scared they would not get paid.
Yet the agit-prop crowds of demonstrators continued to rule the streets and universities, where anarchy has become the rule. Greece drifted into a cash-based economy, where people are afraid to keep their savings at the bank. The number of unemployed people continued to rise, forcing many to migrate, or else go and live with parents, or simply depend on charity.
A referendum could be justified if its purpose was to bolster Greek support for the difficult measures ahead. But in this case, the intention is the opposite. By calling the creditors’ offer blackmail, Tsipras hopes to wield the referendum as a weapon against his eurozone adversaries, rather than use it to shield his government against the radical holdouts in his own party.
His tactic has already come unstuck because the eurozone has refused to consider extending their bailout offer to the date of the poll. By Sunday, when the referendum votes are due to be cast, there may be no deal on the table to discuss.
The plebiscite will be a vote for the euro or the drachma. Little now stands between Greece and default.
All this unfolding Greek drama serves as an object lesson in economic decision-making and also political brinkmanship. It also calls for hard thought among the rest of the eurozone countries on what steps are needed to put the euro on an even stronger base.