Saturday, June 27, 2015

A Greek Referendum on Creditor Demands: Orchestrated Impediments to Reaching the People

On June 27, 2015, Greek Prime Minister Alexis Tsipras announced a referendum on whether Greece should accept additional austerity in the form of tax increases and pension cuts as demanded by the state’s creditors. Putting the ultimatum from lenders to a popular vote translates into political theory as governmental sovereignty—the portion retained by the E.U. state—voluntarily submitting to the popular sovereign, which is the more fundamental sovereignty in any democracy. “Our responsibility is for the future of our country. This responsibility obliges us to respond to the ultimatum through the sovereign will of the Greek people,” Tsipras said in a televised address.[1] More abstractly, deferring to the people on a major policy question is the responsibility, or duty, of any democratically-elected government. Sadly, few heads of government and legislatures even acknowledge this duty, let alone act on it. In this essay, I address the Greek case as a way of illustrating a few of the drawbacks of appealing to popular sovereignty through a referendum, while still holding that the duty itself is valid. I contend in particular that Tsipras’s Greek opponents, E.U. officials, and the state’s lenders (through government officials in other E.U. states) intentionally sought quite disrespectfully to manipulate Greece’s popular sovereign by distorting the question on the referendum to get a “yes,” or “oxi” result. That is, federal and state officials in the E.U. sought to scare and confuse the popular sovereign of one state—bullying, in effect, the basis of democracy itself for power and money.

 Greece's PM Tsipras looking rather fatigued after meetings on the bailout. (John Thys AFP/Getty)

Prime Minister George Papandreou had been quickly ousted in 2011 because he had announced a referendum on budget cuts that lenders were demanding. Essentially, the sovereign will of the people was eclipsed by an incoming government by technocrats. E.U. officials and the heads of lender-states such as Germany hypocritically spoke out against the referendum, and doubtless played a role in the fall of Papandreou’s government through meddling in Greek politics. Four years later, E.U. officials and those of lender-states were using the referendum as a way to replace a Greek prime minister who would not play along—who had the gall to put popular sovereignty above that of governments, even his own (even if doing so was good politics for the prime minister).

To be sure, exceptions could be found. Marine Le Pen, leader of the National Front party in France—Greece’s second-largest creditor-state--hailed the Greek government’s decision to go to the people as a reminder to “the European elite that in democracy, there are people, and they are the only sovereigns.”[2] That Le Pen and her party favored the creditor demands lends a lot of credibility to her public statement. It is not asking too much, therefore, to expect the same from state officials in Germany or federal officials, such as the president of the European Commission and that of the European Parliament.

At the time, The New York Times claimed, “(W)hat is playing out now is a largely unacknowledged campaign to oust him, led as much by his critics among other European leaders and top officials as it is by his rivals in Greece. . . . (U)nder cover of a referendum in which the rest of Europe has a clear stake, European leaders who have found Mr. Tsipras difficult to deal with have been clear about the outcome they prefer. Many are openly opposing him on the referendum, which could very possibly make way for a new government and a new approach to finding a compromise.”[3] That is, part of the strategy was to turn the referendum into a de facto vote on Tsipras himself—thus intentionally distorting the question to serve creditor-ends at the expense of popular sovereignty in one state. “This has been a silent coup d’état,” said Stelios Kouloglou, a European Parliament member with Syriza. “The idea from the very beginning was to overthrow Tsipras and get someone in there who would do what they were told.”[4] Complaining about European interference in the vote, Tsipras said that in the event of a yes vote, he would remain in his “institutional role” and see that the procedures provided for by the Constitution were followed.[5] Indeed, proffering a question to the people does not imply that the government official or even the government itself should fall if the vote goes one way or the other, unless the referendum’s question is explicitly and precisely that.

Nevertheless, some important E.U. officials blatantly sided with the lender-states in calling in effect for Tsipras’ ouster—even using the prospect of default as leverage to threaten the Greeks into voting yes. “Martin Schulz, a German who is president of the European Parliament, made clear that he had little regard for Mr. Tsipras and his government. ‘We will help the Greek people but most certainly not the government,’ he said.”[6] In attempting to link the continuance of the government in power to the referendum, Schulz was making it more unlikely that governments would willingly defer to popular sovereignty outside of elections in the future.

Additionally, since Germany was Greece’s largest creditor-state, Schultz was in effect using the federal legislature to do his state’s bidding. In other words, the federal official was acting de facto as a state official. “There has been a troubling lack of impartiality by European Union officials,” said Simon Tilford, the deputy director of the Center for European Reform, in London. “We have seen a steady stream of very inappropriate remarks.”[7]

Nearly the entire top European leadership in Brussels was backing a yes vote.[8] Remarks that reflect this bias undermine the E.U. itself, for the legitimacy of a federal system depends on the federal level not being used as a weapon by the strongest state. In the U.S., New Jersey and other small states had insisted on a legislative chamber at the federal level that would represent the states with equal votes to each one—whether New York or Delaware—so the big states could not use the additional powers being given to the federal level to dominate the small states with additional leverage. It would seem that qualified-majority voting is not sufficient protection to the small states in the E.U., though the problem could also be excessive state identification, or nationalism, generally in the E.U. and more particularly of some federal officials.

We should not conclude, however, that every German was marching to the same drummer; after all, Greece had written off German debt after World War II and some Germans doubtlessly felt the pressing instinct of fairness and even gratitude. Sigmar Gabriel, Vice Chancellor of Germany, for example, said of the Greek referendum, "We'd be well advised not to dismiss this suggestion from Herr Tsipras out of hand and say 'that's just a trick'. But rather if the questions are clearly framed . . . then that could make sense."[9] By “clearly framed,” we can infer understandable by the voters, on the specific question on the ballot, and neutrally put. Otherwise, the popular sovereign would essentially be disenfranchised.

In 2012, Florida had attached a series of constitutional questions on its ballot; the technocratic and legalistic language effectively disenfranchised the average voter, for understanding a question is a prerequisite to being able to answer it. Not only did the wording effectively obviate the will of the people; the device may have even been passive aggressive in nature, as if to dismissively say, too bad if you are too stupid to read this. At the very least, the assumption that the electorate should understand legislative language is faulty. Because popular sovereign is superior to governmental sovereignty in a democracy, the language of the people is superior politically and governmentally to that which legislative, executive, and judicial branches of government use in the trenches.

In 2015, Tsipras was well advised, therefore, to translate the bailout proposal into terms that a layperson could readily understand. To replace the legal and technocratic diction of the proposal with more basic words would match the policy-judgment-level that is appropriate for the popular sovereign. This does not mean, however, that the question is more general—drawing in exogenous questions even those that are related to the question on the table.

For example, the question clearly framed would not be so general that it could be assumed to be a referendum on whether Greece should drop the euro or even secede from the Union. To fuse all of these questions would mean that the result of referendum could not be taken as an answer on whether the Greek government should accept the creditors’ terms. Days before the vote, Tsipras said publically that the referendum would be only on whether to agree to the deal being proposed by Greece’s creditors; nevertheless, “many of his opponents” were saying “it is actually about whether Greece wants to stay with the euro.”[10] Antonis Samaras, the former conservative Prime Minister of Greece and thus one of Tsipras’s political opponents, presented a false, misleading dichotomy in claiming, "Tsipras brought the country to a total deadlock. Between an unacceptable agreement and a euro exit."[11]

In fact, Samaras went on to say that the referendum question was effectively a "yes" or "no" to Europe. The president of the European Commission, Jean-Claude Juncker, said at a news conference that “responsible, honorable Greek citizens . . . must say yes to Europe.”[12] Maybe the federal president of the executive branch was assuming that austerity is synonymous with Europe, or perhaps he was implying that all of Europe was against Greece, such that the Greeks would be voting for or against the rest of Europe. In any case, the rhetoric clearly surpassed the question on the referendum itself. Nevertheless, sensationalistic media-outlets did not take long to join that bandwagon. The Huffington Post, for example, was running headlines suggesting that the “European experiment” hung in the balance. The implication is that the euro currency would collapse.

The question that the Greek legislature decided to put before the Greek voters left “open the question as to whether the [State] had other options besides leaving the euro.”[13] According to Reuters, even a default “would not necessarily lead” to Athens dropping the euro currency.[14] “(T)he very threat of a ‘Grexit,’ or Greek exit from the euro, only exists because the creditors want it to. There is nothing in eurozone rules that says a country that defaults on its debts is no longer entitled to use the euro currency.”[15] Nevertheless, Mark Weisbrot, an economist and a co-director of the Center for Economic and Policy Research in Washington, “said the Europeans were having a powerful impact on the [referendum] by saying over and over that the vote was a decision about staying in the eurozone.”[16] Jeroen Dijsselbloem, the “eurogroup” chair, and Juncker both insisted a “no” vote would endanger Greece’s continued use of the euro. Since the states that use the euro can use the ECB to force the state of Greece to rely on its own currency, “this amounts to a thinly veiled threat.”[17]

Karl Whelan and other economists, including former IMF senior manager Peter Doyle and Mark Weisbrot “describe a vicious cycle in which the ECB, by constantly warning of a Greek default and Grexit, makes it a self-fulfilling prophecy in order to turn up the pressure on the Greek government. The ECB’s warnings of a Grexit prompt panic and bank withdrawals, forcing Greek banks to rely on the [Emergency Liquidity Assistance (ELA) program] for liquidity. Then the ECB makes clear its willingness to cut off liquidity at a key moment, which shows its willingness to allow Greece to run out of money, worsening depositors’ jitters and deepening the country’s dependence on ELA loans. . . . By making the threat of a Grexit credible in this way, the ECB can choose to follow through with it, or can use it as a cudgel to force new concessions on Greece,” presumably under tacit orders from the creditor states that use the euro.”[18] In short, the creditor-states could use the central bank to force a state out of the “eurozone.”

The experts said that the timing of the capping of emergency funding to Greek banks appeared to be part of a campaign to influence voters. “I don’t see how anybody can believe that the timing of this was coincidence,” said Mark Weisbrot. “When you restrict the flow of cash enough to close the banks during the week of a referendum, this is a very deliberate move to scare people.”[19] Tsipras made it clear that he thought the European Central Bank’s action was meant to influence the referendum. “This was a vengeful tactic,” he said. “The Eurogroup finance ministers didn’t want to allow the Greek government, the Greek democracy and the Greek people to exercise their right to democratic procedures without interventions. What we’re seeing happening since Saturday,” he said, “is an orgy of interventions and scaremongering of the Greek people so that the lenders’ preferable outcome materializes.”[20] In other words, government officials, whether federal or of other states, were using popular sovereignty—the basis of their own authority—like a dirty rug in getting what they or their paymasters wanted.

For the threat to work, the Greeks would have to feel an impending, or urgent sense of likely doom. The scenario can be real or contrived, just as long as it is believed. The previous January, the Greeks had elected an anti-austerity government, and yet federal officials as well as those of the creditor-states painted a doomsday scenario were the Greek government to miss the €1.5 billion I.M.F. payment due at the end of June. Yet on July 1st, The New York Times reported that Greece was “not technically in default  because credit-rating agencies did not consider the I.M.F. to be a commercial lender.[21] Even the I.M.F. refused to declare Greece in default. Would Greece similarly not be in default were it to miss a payment to another E.U. state government, since a government is not a commercial lender? When the Apocalypse did not materialize in line with the baleful predictions doubtlessly orchestrated to pressure Tsipras into caving in at the last minute to the creditor demands, the creditors and their political allies set about scaring the Greek people by obfuscating the referendum as being on the euro or even Europe itself rather than further austerity.    

That politics can involve the art of manipulation is hardly a surprise; that so many people believe the various ruses is more remarkable. When a ruse is found to suddenly evaporate rather than pulverize when it finally comes to pass and yet the manufacturers still have credibility as they endeavor on their next doomsday scenario, the beguiled audience itself is culpable, even though access to the media provides the manipulators with cover and thus sustains their credibility. Few in an electorate can break this tight egg-shell and smell the putrid yoke inside.

The upshot is that government officials in creditor-states, Tsipras’s political rivals in Greece, and the head of E.U. governmental institutions were distorting and obfuscating the question being put to the Greeks by their state government. Whether the demands of the creditors are in themselves good or bad, the strategy of messing with popular sovereignty is problematic from a democratic standpoint. In other words, this analysis should not be read as a pro-no piece.

In fact, that Tsipras was not without bias is also problematic. The writing of the question itself, for example, should be free of his pro-no bias. That is to say, nothing short of a neutrally-written question would be consistent with deferring to the will of the people. According to Reuters, the E.U. “offered to release billions in frozen aid if Greece accepted and implemented pension and tax reforms that [were] anathema to its leftist government, elected [the previous] January on a promise to end austerity.”[22] Referring to the reforms as arduous or exploitive, for example, would detract from the referendum as a means of gauging the will of the sovereign. Hence, that “(g)overnment ministers emerging from the cabinet meeting in Athens [before the prime minister announced the referendum] said they were confident Greeks would vote no and reject the bailout demands”[23] should not mean that those officials were planning to word the question to get the result they wanted.

Ideally, a referendum question should be approved by an entity besides the partisan government in power. As discussed above, even in terms of “translating” technocratic and legal language into everyday words, government workers may be biased—saying, in effect, that the people should understand the language of bankers and governments (which is not a valid claim). A slippery slope extends to viewing the content of the question to be written in terms of should.

According to two commentators days before the Greek referendum on whether to accept the creditors’ terms for further austerity, the more fundamental question was whether “there is room in Europe for democracy.”[24] Can creatures of governmental sovereignty get out of the way in deference to the popular sovereign? The referendum a devise may itself be faulty, given how easily federal and state officials in the E.U. were able to distort and confuse the question. Is it even possible for a people to focus on a specific policy such that a government can have confidence that the popular sovereign answered the question put before them?  In short, popular sovereignty itself may have a vulnerable point—that of reaching the people and the people in turn focusing on one specific question without assuming that the question is an occasion to make a statement about something else or is actually another, broader question.



1. Lefteris Papadimas and Renee Maltezou, “Greece’s PM Tsipras Calls Referendum on Bailout Deal,” The Huffington Post, June 26, 2015.
2. Daniel Marans, “Europe’s Populists Rally to Greece’s Side,” The Huffington Post, June 29, 2105.
3. Suzanne Daley, “Alexis Tsipras’s Enemies in Europe See Their Chance in Vote on Greece’s Bailout Terms,” The New York Times, July 2, 2015.
4. Daley, “Alexis Tsipras’s Enemies.”
5. Daley, “Alexis Tsipras’s Enemies.”
6. Suzanne Daley, “Alexis Tsipras’s Enemies in Europe See Their Chance in Vote on Greece’s Bailout Terms,” The New York Times, July 2, 2015.
7. Daley, “Alexis Tsipras’s Enemies.”
8. Daley, “Alexis Tsipras’s Enemies.”
9. Lefteris Papadimas and Renee Maltezou, “Greece’s PM Tsipras Calls Referendum on Bailout Deal,” The Huffington Post, June 26, 2015.
10. Daley, “Alexis Tsipras’s Enemies.”
11. Papadimas and Maltezou, “Greece’s PM.”
12. Daley, “Alexis Tsipras’s Enemies.”
13. Papadimas and Maltezou, “Greece’s PM.”
14. Papadimas and Maltezou, “Greece’s PM.”
15. Daniel Marans and Ryan Grim, “This Is What the End of European Democracy Looks Like,” The World Report, July 2, 2015.
16. Daley, “Alexis Tsipras’s Enemies.”
17. Daniel Marans and Ryan Grim, “This Is What the End of European Democracy Looks Like,” The World Report, July 2, 2015.
18. Marans and Grim, “End of European Democracy.”
19. Marans and Grim, “End of European Democracy.”
20. Marans and Grim, “End of European Democracy.”
21. Jim Yardley, James Kanter, and Jack Ewing, “Greece Misses Payment as European Creditors Fail to Extend Bailout,” The New York Times, July 1, 2015.
22. Papadimas and Maltezou, “Greece’s PM.”
23. Papadimas and Maltezou, “Greece’s PM.”
24. Marans and Grim, “End of European Democracy.”