In this post, Nicola Countouris, Reader at the UCL Faculty of Laws, analyses the reasons why the Greeks may have rejected the creditor institutions’ economic and reform proposals. Arguing that frustration is not the only explanation for Tsipras’ win at the ballot box, and recognising the daunting challenge that lie ahead of the 19 Eurozone democracies, he argues that Europe’s constitutional envelope can be spacious enough to accommodate different versions of democratic economic and human aspirations.
For the second time in six months the Greeks have voted for a political project (which many have and will continue to describe as a ‘political adventure’) that runs against the grain of the unanimous expectations and imperatives of the EU institutions, the IMF, and the bulk of both centre-right and centre-left European governments. Against the odds, against the economic and reform instructions imparted by the lending institutions, and – many will say – against their best interest, the Greeks have refused to conform, and have flatly rejected on two occasions now, the politics of austerity.
Ashoka Mody, Visiting Professor at Princeton University and former Deputy Director in the IMF’s Research and European Departments, critiques the IMF report published on 2 July, on the eve of Greece’s referendum. This report found that Greek debt was not sustainable and deep debt relief along with substantial new financing was needed to stabilize Greece. This report, according to Mody, reveals that the creditors negotiated with Greece in bad faith. He suggests that the Greek debt burden is much greater than portrayed by the report, and that the policy measures proposed to reduce that burden, including more austerity, will make matters worse. This article was first published on bruegel.
On 2 July, the IMF released its analysis of whether Greek debt was sustainable or not. The report said that Greek debt was not sustainable and deep debt relief along with substantial new financing were needed to stabilize Greece. In reaching this new assessment, the IMF stated it had learned many lessons. Among them: Greeks would not take adequate structural reforms to spur growth, they would not sell enough of their assets to repay their debt, and they were unable to undertake sufficient fiscal austerity. That left no choice but to grant Greece greater debt relief and to provide new financing to tide Greece over till it could stand on its own feet. The relief, the IMF, says must be provided by European creditors while the IMF is repaid in whole.
In this post, Pavlos Eleftheriadis, Associate Professor of Law and a Fellow of Mansfield College at the University of Oxford and a spokesman on EU affairs for the Greek political party ‘To Potami’, argues that a vote in the Greek referendum on Sunday will be a choice for or against Europe.
The Greek referendum is a choice for or against Europe, for the drachma or the Euro, a choice between isolation or engagement with Europe. It is also a vote of confidence, or not, for the new government.
A ‘no’ vote, which the government of Syriza and the Independent Greeks propose, will begin a process of gradual disengagement from the Eurozone and possibly from the EU. A ‘yes’ vote, on the other hand, will be a spectacular defeat for the government, which only a few weeks ago had an approval rating of 60 or 70 per cent. It will also be a powerful statement of intent of the Greek people for staying the course of painful reform, which began in 2010 and has seen the largest fiscal consolidation in history and a drop of 25 per cent in GDP.