Greece is broke. Fiscally, to be sure, but also politically. Regardless of who is to blame for creating the economic conditions, or if Greece’s creditors are exacerbating them, the current Greek government has failed diplomatically, politically and economically.
Prime Minister Alexis Tsipras, who leads the anti-austerity Syriza Party, has alienated nearly every other European leader — be they presidents, prime ministers or those presiding over financial institutions like the International Monetary Fund or European Central Bank. Tsipras’ mixed signals on accepting a bailout package, as well as his call for a snap referendum Sunday, led to paralysis and technical default.
The bailout package has been rescinded, but Greeks will be asked to vote on it anyway. Tsipras, urging rejection, said on Wednesday: “ ‘No’ does not mean a rift with Europe, but a return to Europe with principles.” But Europe is seemingly questioning Tsipras’ principals, and a “no” vote may mean more stalemate. A “yes” vote, however, might mean a recalibration or resignation by Tsipras, in office since just January.
So those living in the birthplace of democracy will seemingly have to interpret the plebiscite on their own. Many may consider it a broader referendum on remaining in the eurozone, or returning to the drachma. Polls suggest a “no” vote. But as beleaguered Greeks reflect on closed banks and panicked pensioners, an upset “yes” — to what is not certain — may be the result. Regardless of the outcome, European leaders should set aside their opinion of Greek leadership and do what’s best for the Greeks, as well as Europeans, and make a permanent fix to the perpetual crisis.
Calls for Greece to live up to its responsibilities are understandable, and it’s important that those in Europe’s other sclerotic economies don’t get the wrong signal. But despite best intentions, the imposed austerity has become punitive, not productive, and has only prolonged the crisis. Greece is already experiencing Great Depression levels of unemployment: 25 percent, with half of younger workers jobless. A deeper spiral may spur social unrest. Greece is a vital member of NATO, and the first destination for Mediterranean migrants fleeing failed states in Africa and the Mideast. Europe cannot afford and should not allow its own failing state. And lurking is Russian President Vladimir Putin, seeking to dissolve European Union unity on sanctions for Russian aggression in Ukraine.
This is not just a European problem. The impact could be global. “Market reaction is very difficult to predict,” Andrea Montanino, director of the Global Business and Economics Program at the Atlantic Council, told an editorial writer. “If markets are rational, they understand this is a minor thing. Everybody in the world is talking about Greece, but it’s 3 percent of Europe’s GDP, it’s a relatively small country in the global economy and Europe has a lot of firewalls. So I don’t see any big trouble. But markets can also be irrational …”
It’s time to restore rationality to Greece, the European Union and, by extension, global political and economic order. Greek voters, as well as Greek and European leaders, should proceed with appropriate caution.