Greek Referendum

Athens, Europe Wage Propaganda War

A woman holds a flyer which reads 'Greece says NO'  during a mass anti-EU rally in central Athens, June 29,2015. Keine Weitergabe an Drittverwerter. [ Rechtehinweis: No usage in France and Poland, Keine Weitergabe an Drittverwerter., Keine Verwendung in Frankreich und Polen, Please check addit ]
'Greece says NO' says the poster - that's just what might happen on Sunday.
  • Why it matters

    Why it matters

    The stability of global markets and European unity hinge on how the Greek vote goes on Sunday.

  • Facts

    Facts

    • Greece holds a referendum on Sunday on whether to accept the terms of a previous offer from its international creditors.
    • The government in Athens claims a “No” vote will strengthen their negotiating stance with the lenders.
    • On Thursday, Finance Minister Varoufakis said he would rather “cut off his arm” than sign up to the proposals.
  • Audio

    Audio

  • Pdf

 

Greece’s finance minister, Yanis Varoufakis, earlier this week threatened Europeans with initiating legal proceedings against a possible exclusion of his country from the euro zone.

That is somewhat remarkable, since up to now no member of a European government has called for a Grexit. On the contrary, even Mr. Varoufakis’ arch nemesis and German counterpart, Wolfgang Schäuble, made a public statement after the failed negotiations that Greece remains in the euro zone.

That is less a wish than a statement of fact. European Union treaties envision no possibility for an exit from the currency union, much less an expulsion. The euro is set up to be irreversible — which doesn’t mean that a Grexit couldn’t happen.

But the fact remains that many key officials, from French president François Hollande, to Germany’s chancellor Angela Merkel, continue to exert themselves to prevent a departure of Athens from the euro. At the moment, they are doing more than the Greek government itself.

Obviously, Mr. Varoufakis is aware of the legal situation and the political will of Europeans. His threat has another motivation: It is part of a propaganda battle.

It began on Monday in a concerted action by the Europeans. The president of the European Commission, Jean-Claude Juncker, called from Brussels for Greek voters to vote with “Yes” on the Sunday referendum “no matter how the question is formulated exactly.” Because a “No” to the lenders’ bailout proposals, the issue on which Greek prime minister, Alexis Tsipras, has called Greeks to vote, would be a “No to Europe,” Mr. Juncker said.

It is pretty clear that a 'No' would be the beginning of a withdrawal of Greece from the euro zone.

A short time later in Paris, Mr. Hollande said the issue is “whether the Greeks wish to remain in the euro zone.” Standing alongside Ms. Merkel in Berlin, the German vice-chancellor, Sigmar Gabriel, repeated this almost word for word. Italian prime minister, Matteo Renzi, spoke of a decision being “euro against drachma.”

This represents Europe’s attempt to counter the way the Greek government is presenting the referendum vote. Mr. Tsipras has tried to make his countrymen believe that they are voting only on an unpopular package of reforms and austerity measures insisted upon by the creditors, not on the euro. On the contrary: the “big No” demanded by Mr. Tsipras would give him a stronger negotiating position, he claims.

This impression must be corrected by the euro partners. It is pretty clear that a “No” would be the beginning of a withdrawal of Greece from the eurozone. Under those conditions, it would no longer be possible to attain a majority in the German Bundestag and in other parliaments for a further rescue program.

Greece would be drawn ever deeper into the whirlpool of a state bankruptcy, the European Central Bank would have to cancel its emergency loans to the rickety Greek financial institutions, and the banking system would collapse. Even with a parallel currency, Greece could only keep itself in the currency union for a few months, or perhaps weeks.

The Grexit would then be unavoidable — even without an active decision of expulsion that Mr. Varoufakis could contest in court. With his threat to submit a lawsuit, the Greek finance minister wants to neutralize his countrymen’s fear of a “No” at the referendum. This is an attempt to take the edge off the dramatic appeals of the country’s euro partners.

 

Greece's Path-01 (2)

 

In turn, the Europeans have launched the second stage of their public-relations offensive. First there were threats, now there are enticements. Mr. Juncker has not only published the old offer of assistance by the financial donors along with their requirements. He is also emphasizing a readiness for further negotiations, as is Ms. Merkel.

This is, of course, a case of covering their own backs. No one wants to have it said at the end that he or she didn’t try everything right up to the last minute. But it is also a signal to the Greeks: “We don’t want to let you fall — if with a ‘Yes’ you fundamentally acknowledge the logic of the program to rescue the euro, i.e. solidarity and self-exertion.”

In spite of all the dissent caused by the latest escalation of the Greek debt crisis, it is evident that there continues to be a feeling of responsibility for Greece on the part of Europe, and compassion for a population that is being held hostage by its government.

While the campaign around the referendum wages on in Athens, Brussels, Berlin and Paris, only the Greeks can draw the correct conclusions when they are standing in the voting booths on Sunday.

 

Jan Hildebrand is the deputy head of Handelsblatt’s Berlin bureau. To reach him: hildebrand@handelsblatt.com.

 

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