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ANDLESSONS TO BE DRAWN

GREECE REFERENDUM ON DEBT REPAYMENT

AND

LESSONS TO BE DRAWN

 

Mulugeta Tesfay

01/07/15

 

The Greek people are going to hold a referendum on Eu bail out proposal on Sunday 5th of July 2015. The Greek people will vote by saying a "yes" or "no" over the 1.6 billion Euros debt repayment to the IMF. In a nutshell if the majority of the Greek people vote for "yes" to repayment, then the deal is done and dusted. If the "no" vote exceeds then the Greek people will have to dwell on with the crisis they have faced since 2010. The question is that, Do the Greek people have the morale capacity and the technical capability to reject the repayment of the debt already squandered foolishly by their successive governments? The answer is, the Greek people should not be forced to vote on the issue as the country is liable for the payment.

 

It is squarely up to the Greek Government to settle the account with the IMF. The rationale behind this is that the Greek govt should not transfer the burden at the 11th hour to the Greek majority who have the least knowledge on how to settle the account propelled by media campaign and influence.

 

According to Andrew Heywood, a renowned political scientist and writer, defines referendum as " A referendum is a vote in which the electorate can express a view on a particular issue of public policy. It is typically used not to replace representative institutions". What we can deduce from this definition is that public policy is a collective interest of any society, an action plan which is good for that particular society. Interests can have national and international dimensions. The Greek people as they did, joined the EU and yet it is up to the Greek people to leave the Euro zone. However, as long as Greece is member of the Euro zone it has to comply with Euro rules and regulations. The other inference is that all executive duties should not necessarily be replaced by plebiscites. Loans secured from International bodies and governments, before becoming operational, have to be approved by parliament. In Ethiopia, loans that are secured from International financial institutions  or governments are first ratified by the parliament before becoming operational. Scheduling in repayment of debts is the duty of the Executive body. As a general norm it is up to the Greek Government to repay the loan secured from the IMF, as the Greek people have given the mandate to the government to handle such international transactions. However, the Greek govt has opted to manipulate referendum, refraining itself from taking responsibility in making difficult decisions by tending to simplify and distort issues reducing them to questions that have a "Yes" or "No" answers.

Greece's political and economic crisis did not emanate as a result of being a member of Euro zone. The genesis of the problem is from poor handling of the economy and lack of stable and responsible governments. As a result of this, the Greek people are polarized. In between the low income society, pensioners and the 27% of the unemployed working population are paying heavy prices. Alexis Tsipras and his left wing govt. have betrayed the Greek population in a situation where it never rains but continues to pour. It was simple to the Prime Minister and his cabinet to resign than  gambling over the Greek people  and the EU.

 

A good reference in handling economic crisis to the point in discussion is Ireland. The Irish people suffered a lot because of austerity measures and economic bubbles. The Irish people were badly over heated by the economic bubbles. Many emigrated to USA and Australia. Those who remained in the country tightened their belts and worked hard, coupled coupled with sound economic policies, to come out from the crisis. Today, Ireland has begun to emerge as one of the fastest growing economies in Europe, enjoying the light of the economy. Nevertheless, the Greek government's lack of negotiation skills, short of technical ability, lack of diplomatic maneuver and stubborn position has left the Hellenic Republic on the brink of collapse.

 

Now Greece is in arrears, though it is said in mild term, it has defaulted. It has become the first developed economy to default on a loan with the IMF.  But why is Greece in default? As mentioned above, lack of ability and sincerity. The Greek govt gave false hopes to the people just to win election from the outset.  What the Greek govt  promised was in contravention to the modus operandi of financial institutions and EU. 

 

Any government has the authority and responsibility for the daily administration of the state. Among others, it secures loans, sign protocol agreements and treaties with different states and non-state actors, it legislates security matters and so on. This is what expected from healthy governments.

 

Mulugeta Tesfay

Retired Diplomat

mhailu31@yahoo.com         

         

 


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