As admirable as George Papandreou’s commitment to democracy is, there is still something
alarming about his announcement, last night, of a national referendum on Greece’s bailout. This is not just a risky political gambit, which could bolster or destroy his government depending on
numerous variables, but it has all sorts of gruesome implications for the wider European economy. The Greek people may be entitled to say No to a rescue package that promises little but demands
much — but what then? It is that uncertainty that has set the markets trembling this morning.
And that’s assuming that Papandreou’s government even manages to make it to January, the proposed date for a referendum, alive. The Greek Prime Minister is submitting himself to a parliamentary confidence vote this Friday, and there is talk that the main opposition leader, Antonis Samaras, might attempt to force an election by asking his party colleagues to resign their seats. In an excellent post on his new blog, the Daily Mail’s political editor (and “honorary Greek”) James Chapman even raises the prospect of a military coup. My guess is that, whatever happens to the make-up of the Greek executive, we will soon see yet another emergency European summit to remodel the bailout package.
Just imagine what the Chinese must be thinking. Despite their early, understandable hesitation about buying up European debt, there were some signs that they were coming round to the idea. The Chinese state news agency, Xinhau, had published a couple of articles about how “China will continue to support Europe and the euro,” and how “China is a friend indeed for debt-ridden Europe,” that sort of thing. But now? What extra reassurances will Beijing have to seek now? Or will they decide to step back from Europe’s begging bowl (aka, Special Purpose Investment Vehicle) altogether?
The answers to those questions won’t just matter for Greece, but for Italy, Spain, France, Germany, etc, too. Oh yes, the eurozone’s dominoes are still poised to topple — and others with them.
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