Greek Prime Minister George Papandreou surprised European leaders Monday when he called for a referendum on the new aid package for Greece, putting austerity measures and potentially the nation’s membership in the euro zone to a popular vote. Papandreou also called for a parliamentary confidence vote that will begin tomorrow and conclude late on November 4.
The referendum will allow Greek citizens to vote on whether or not to support the debt deal and program of austerity measures in exchange for foreign aid. Greeks have been voicing their disapproval of heavy spending cuts since the first bailout package was established, often organizing mass strikes that have shut down many public sector services, including transportation. Some protests in Athens have turned to violence.
An opinion poll published October 29 showed that most Greeks believe the accord on a new bailout package, reached by European leaders at a summit in Brussels late last week, to be a negative. Addressing lawmakers on Monday evening, Papandreou said, “Let us allow the people to have the last word, let them decide on the country’s fate.”
When polled on October 27, the day the agreement was announced, most of the 1,009 respondents said the accord should be put to a referendum, according to the results of a Kapa Research SA poll, published in To Vima newspaper. Of those polled, 46% said they would oppose the plan at such a referendum. However, in the same poll, more than seven in 10 favored remaining in the euro zone.
Should Greeks vote down the structural changes required of Greece per the terms of its bailout, it could break the deal between Greece and its troika of foreign lenders — the European Union, European Central Bank, and International Monetary Fund — leaving the country to find its own way back from recession while increasing the likelihood that its problems will infect other members of the euro zone, namely Italy.
Without the bailout funds, Greece would be unable to meet its expenses and would default on its debt, something European leaders have been struggling for many months to avoid because of its far-reaching repercussions. Furthermore, losing the referendum would result in new elections, something that could also result from a no-confidence vote.
However, should Greeks vote in favor of moving forward with the package, it would effectively shift responsibility for the nation’s painful economic choices from Papandreou’s Socialist Party onto the public. It would also act as a vote of confidence in Papandreou, who has been pushing through the highly unpopular austerity measures in order to ensure Greece receives the funds necessary to stave off default.
While the referendum will not be held until details of the EU accord are finalized, the vote of confidence in Parliament will begin Wednesday and conclude late on November 4, according to statements Monday by House Speaker Filipos Petsalnikos.
European leaders agreed at a summit in Brussels last week on a second aid package for Greece after Papandreou scraped together parliamentary approval for the second round of austerity measures in four months. Greece would receive 130 billion euros in public funds, plus a 50% writedown on Greek debt. Because Papandreou pushed through new austerity measures to make the aid package possible just last week, his decision to call a referendum was wholly unexpected and blindsided many European leaders involved in constructing the bailout.
Don’t Miss: Are Ratings Agencies Taking Bribes?
Despite the possible fallout from the referendum, Greek Finance Minister Evangelos Venizelos said, “I can no longer look at polls where the majority is against the agreement, the majority is against the program, but a majority is also in favor of staying in the euro.” The referendum will force Greeks to assess their options and the possible outcomes. After many months of protests, Greeks now have the power to decide how the nation will proceed.