Greece giving voice to euro-skepticism with plans for referendum on debt bailout

ATHENS — Here in the birthplace of democracy, a plan announced this week to put a punishing bailout plan up for a public vote has spooked leaders and investors while exposing one of Europe’s dark secrets: Its citizens remain deeply skeptical of efforts to tie European economies tightly together.

The resulting tug of war between voters and leaders is at least partly responsible for Europe’s current plight, analysts say. And it could plague long-term attempts to solve the continent’s problems as Greeks weigh whether to veto the rescue package and as the rest of Europe debates proposals for further integration intended to put the euro on a safe footing.

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Greek Prime Minister George Papandreau's call for a surprise referendum to the bailout deal he's been offered to save his country from bankruptcy is infuriating world leaders. (Nov. 2)

Greek Prime Minister George Papandreau's call for a surprise referendum to the bailout deal he's been offered to save his country from bankruptcy is infuriating world leaders. (Nov. 2)

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President Obama heads to France to meet with world leaders for the G-20 Summit. A key focus of the summit will be turmoil in Greece. (Nov. 2)

President Obama heads to France to meet with world leaders for the G-20 Summit. A key focus of the summit will be turmoil in Greece. (Nov. 2)

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The plan by Greek Prime Minister George Papandreou to offer his 11 million citizens a vote on austerity measures imposed by Greece’s creditors is shaping up as a last-ditch dare to gain backing for the package or face the consequences of default. What Greek voters choose, assuming that the referendum goes forward, will have deep consequences not only for them but for the rest of the European Union’s 500 million residents.

That’s why German Chancellor Angela Merkel and French President Nicolas Sarkozy — who face their own disapproving audiences at home — are so fearful of the referendum’s outcome. Merkel, Sarkozy and Papandreou met for a tense discussion Wednesday in Cannes, France, before the Group of 20 meeting of world leaders.

“In a democracy, parliaments wish to have their say, their people wish to form an opinion,” Merkel told reporters after the meeting. “If the Greek people say that the difficulties that are linked to this . . . are obligations that they do not wish to shoulder, that is their decision.”

While other European leaders have pressed Greece to accept the terms without submitting them to a vote, that approach may not be tenable in the long term, said Ulrike Guerot, the head of the Berlin office of the European Council on Foreign Relations.

“You cannot do this without the consent of the people,” she said.

Greek leader’s gamble

Papandreou’s hope is that voters will choose a path that, in the short term, will leave them fewer options — opting for a bailout plan that puts many of the country’s policies in the hands of European officials who want deep cuts in public spending to help Greece’s economy become more sustainable.

The fact that further European integration requires voters to cede power is part of the reason so many initiatives that would promote a more extensive European Union have struggled when they have been tested at the ballot box, analysts say.

It will be up to Papandreou to convince his voters that they need to support his approach. If he wins, he could emerge strengthened, analysts say. But Greek opinion polls paint a contradictory picture; strong majorities support staying on the euro and oppose accepting the measures that the rest of Europe says are necessary to remain there.

Papandreou’s goal, according to documents circulated internally by his office, is to force a discussion about the benefits and trade-offs of the tough measures taken to remain part of the euro zone.

Papandreou told his cabinet early Wednesday that the vote, which European leaders said would be held in early December, would be a “clear mandate and strong message within and outside Greece on our European course and our participation in the euro,” according to a transcript of the conversation released afterward, Bloomberg reported.

But Papandreou’s doubling down has spooked many Greeks, too, including members of the prime minister’s own Socialist party, who fear the destructive consequences of a “no” vote. After he announced the referendum plans, several of them called for his resignation, others called for a national unity government, and one lawmaker resigned from the party, dropping Papandreou’s legislative majority to a razor-thin 152 of 300 seats.

European identity

The fears over the consequences of seeking citizens’ approval for European moves might be well founded. French and Dutch voters sank a proposed European Constitution in 2005. They weren’t given an up-or-down vote on a later treaty proposal, but Irish voters rejected that one in 2008, before being cajoled into approving it the following year.

The problem, analysts say, is the still-ethereal notion of European identity vs. the much older, deeply rooted sense of being part of a country with a shared language, history and outlook.

“As nation states, we believe in standing together as a country. We concede powers to our governments to do things in our name,” said Anna Triandafyllidou, a fellow at the Hellenic Foundation for European and Foreign Policy. “With the European Union there is no such political community.”

That bodes ill for Merkel and Sarkozy’s goals of increasing economic coordination in the euro zone, a move economists say would make the common currency more sustainable but would take power away from individual capitals. Smaller countries fear that the changes would mean nothing more than Germany calling the shots.

In Germany, meanwhile, taxpayers have been just as skeptical about paying out assistance as Greece has been about accepting it. Many polls show Germans cautious about further European integration, and they have deeply mixed feelings about the euro. If Merkel were to call a referendum on the bailout package like Papandreou’s, its passage would also be far from assured, analysts say.

In Greece, several obstacles stood in the way of the referendum, including the question of whether Papandreou will survive a Friday vote of confidence. On Wednesday, his cabinet unanimously declared their support for him after a meeting that stretched into the early morning. As the prime minister jetted to France to be grilled by Sarkozy and Merkel, the Parliament started to debate whether he could remain Greece’s leader. Greece’s president will also have to sign off on the wording of any referendum questions.

The questions will be answered in a city where the remnants of the world’s first democracy are impossible to ignore, but where it is not at all clear whether a vote would produce a consensus in favor of a stronger Europe.

Staff writer Howard Schneider in Cannes contributed to this report.

 
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