The Guardian view on Greece and the euro: no money left | Editorial

Deadlines have come and gone before, but Tsipras’s referendum pledge has finally forced a denouement. Creditors must rethink a failed austerity policy, and the political risk of painting themselves as the enemies of the Greek people

Something was bound to snap in Greece, and now it has. Over six years, jobs have vanished, hope has been smothered and a generation of progress in living standards has been reversed. Suicides soared among stricken individuals, and the collective sense of sovereignty shrivelled. The nation has been crucified on the cross of a currency that it should never have been allowed to join. It awakes to discover the extent of restrictions on accessing its bank accounts.

Step back from the immediate row over proposals and counter-proposals, under which Alexis Tsipras drew a sharp line on Friday with his midnight pledge for a referendum, and this is the real backdrop to Athens’s abrupt decision to stop playing the European game. Fiery and inexperienced, the Greek prime minister has breached all the rules of diplomacy, failing to warn his counterparts about his plebiscite before going public, and perhaps depriving himself of a last bit of leverage in the haggling over bailout terms. His rhetoric contrasts his own mandate with the presumptions of callous technocrats, ignoring the mandates of creditor governments. That threatens the space in which a European club of 28 members is fated to find compromise. And the question he will put to the voters – whether they accept the creditors’ terms for extending a bailout that is now set to finish five days before Sunday’s vote – is arguably a nonsense.

No surprise, then, that the initial response of the eurozone finance ministers meeting in Brussels was to insist that the bailout would indeed end on Tuesday. Greece’s Yanis Varoufakis, the sole dissenter, had to pack his bags. A mood of “let Greece go” was taking hold. But by Sunday evening, there were signs of second thoughts. After briefing that it would not be able to provide the Greek authorities with the extra euros required to keep cashpoints working, the European Central Bank clarified that pre-existing assistance was not being cut off. The European commission published the creditors’ previously take-it-or-leave-it proposal, but now insisted that the plan had always been to marry this stringent short-term scheme with debt relief down the road. Soon Christine Lagarde of the IMF, too, put out a statement advocating debt relief and further talks.

The creditors’ rethink could be a ruse to destabilise Mr Tsipras ahead of his make-or-break vote. But let’s hope it is sincere. If the markets have seen one corner of the eurozone break away, there will be permanent and costly speculation about where the next crack will be. The creditors need to have the humility to recognise that their austerity programme has failed. None of the hardship has made Greek debt more sustainable, yet still they demand more. The loss of about 5% of UK national income in 2008 could be answered by pumping in a fiscal injection of 1% GDP. Greece, where 25% of the economy has disappeared, is instead asked to offer up a fiscal blood donation, whose direct effect is withdrawing 1% of demand.

Most fundamentally, an EU whose democratic credentials are under populist assault from Britain to Budapest needs to avoid reinforcing a damaging caricature. It helped kill the Greek government of George Papandreou after he had proposed a controversial referendum on bailout terms in 2011. Strong-arming a second administration out of consulting a suffering populace could look dangerously like haughty contempt. A club of democracies cannot afford to set itself up against even one demos.


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