Greeks deserve to have a say

The furious external reaction this week to the notion that Greek citizens should have a direct say in their grim future was instructive in ugly ways.

The furious external reaction this week to the notion that Greek citizens should have a direct say in their grim future was instructive in ugly ways.

Greece has been struggling mightily for the past two years, with the aid of its European common market allies, to avoid bankruptcy.

This week, it looked like they had finally agreed on a plan with a chance of success.

When Greek Prime Minister George Papandreou announced that he would let the citizens of Greece pass judgment on that plan in a national referendum, however, all hell broke loose.

Financial markets around the world plunged instantly and deeply. They reacted with horror to the notion that Greeks, who will have to endure years of austerity to make any bailout plan work, should have a say in the matter.

Grimly, one of the first off the mark with that argument was Canada’s Finance Minister Jim Flaherty.

Normally, I have a lot of respect for Flaherty. He’s smart, calm, principled and decent. But this time, he went over the top.

He said, in effect, that speed was of the essence and any delay caused by letting Greek citizens express their views could cause a fragile deal to collapse.

Flaherty was certainly not alone in this view.

On Thursday, the Greek finance minister also came out in opposition to a referendum. That, and negotiations to create a national unity government, led Prime Minister Papandreou to stand down from his referendum plan on Thursday evening.

While politically expedient in the short run, it seems wrong in both principle and practice.

Having support of opposition politicians is not the same as being endorsed by Greek voters. Without a buy-in from Greek citizens, the budget cuts that will be needed to bring the country back to prosperity will be an extremely hard sell.

A hasty decision, without public approval, raises the spectre of riots and deep social disruption.

One of the early, prominent and correct voices on this matter was Bank of Canada governor Mark Carney. Unlike Flaherty and other advocates of haste above all, Carney understands that the only way Greece can climb out of this mess is by pulling together and sharing the sacrifice.

It’s “imperative that there is widespread support” for tough decisions to cut government costs because they will unfold over a long period, Carney told the House of Commons finance committee this week.

Greece is the cradle of democracy. No right-thinking politician would deny its people direct say on an issue that will affect their lives so deeply for years to come.

Prime Minister Papandreou’s razor-thin majority government may survive this crisis because of the Thursday bargain.

But whether Greece will survive without social upheaval is far less certain. No prime minister can lead Greece back to stability and prosperity without public approval for his policies.

The financial crisis in Europe has been unspooling for years. Talks with European bankers who recklessly bought high-yield Greek bonds have been going on since the spring of 2010.

The few weeks required to set up a referendum should not have been an insurmountable hurdle.

For Greeks, the consequences of saying no to the rescue plan are far grimmer than accepting it: national bankruptcy, high inflation and expulsion from the European Union.

The people pressing hardest for an immediate solution to this crisis are European bankers who made foolish deals with Greece in the first place and must now accept 50 per cent losses. Their decisions were driven by wilful ignorance and reckless greed.

It’s more important now for Greece to get the right solution than a hasty one. Getting it right will mean big changes in the way Greeks live.

For generations, they have been cocooned in a fantasy world of tax avoidance. Almost everybody was involved in the scam, including senior members of the bureaucracy and government.

The few tax collectors who tried to do their jobs properly by going after rich tax cheaters routinely found themselves stripped of their duties. Many were consigned to menial back-room tasks, where they would not create problems for rich cronies of their political masters.

But the day of reckoning has come for Greece.

It will be a wrenching haul, but the only way Greece, as we know it, will survive, is if its citizens pull together with a sense of purpose and shared sacrifice.

Pulling the pin on a referendum will make that task more difficult. Greeks who gained the least during the boom years will now be forced to endure the greatest privation in the lean years to come.

But Iceland has survived it, Ireland has endured and so can Greece. They are amazingly creative and resilient people.

The precise path to recovery in Greece is unknown.

The only certainty is that the bankers of northern Europe, who helped create this mess with reckless practices, will not share the pain that will soon be visited on the most vulnerable Greeks.

Joe McLaughlin is the retired former managing editor of the Red Deer Advocate.

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