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On 5 July 2015 – just now – Greeks voted “No” in an overwhelming 60%+ majority in referendum for the bailout terms forced upon them by Eu Creditors.
But what does this vote mean?
It strengthens Greek Government’s Political Position
Current Syriza government is an alliance of left wing parties, who got elected for campaigning against austerity. After winning the recent elections, they made a coalition with a nationalist (center right) party to take over the government.
Creditors do not like left-wing governments who object to privatization, social security cuts and more tax breaks for corporate entities. Left wing governments also – naturally – protect bargaining rights of workers.
All of these were were demanded from Greek governments, including Syriza coalition. Who objected to all of that.
Leaving aside the fact that curbing workers’ bargaining rights is quite irrelevant to a question of Government debt, you can understand that creditors would prefer to have a more cooperative party as Government of Greece.
Not to mention ‘doing away’ with the anti-austerity Greek government would make their hand easier in dealing with anti-austerity sentiment fostering elsewhere in Europe – from Spain to Italy.
To this end, they had done a number of things to shake Greek Government’s position, including cutting critical funding to Greek banking system to force Greek government to introduce capital controls and limit cash withdrawals. (source)
Since there is no reason ECB would need to cut liquidity funding to PRIVATE Greek banks for Greek Government debt, its easy to conclude that this was a move to turn public opinion against Syriza by creating a banking crisis. Indeed, pollsters showed a few points of change in people’s sentiment regarding the proposed referendum after the banking closures.
However, now that despite the biggest economic blackmail Greek people backed Syriza’s position to the order of 60% in a referendum with bigger participation than the elections, Syriza government’s position seems much more sound than the time they came to power.
This 60% can easily be seen as approval rating of Syriza government – the fact that they got this vote despite the banking crisis that ECB forced to scare Greek people strengthens the impact.
Basically this referendum was a vote of confidence for the government – Tsipras, Varoufakis did not hide that fact, by their statements regarding how they would resign if result was ‘Yes’.
It is also possible that Eu circles wanted to let Anti-Austerity movement take over the government, give them a ‘big lesson’ and therefore bury it forever in a few months, as some sources claim. Bringing banking system in Greece to a halt right before expected Greek default could easily have worked for that purpose.
However, sudden and unexpected declaration of snap referendum by Greek government just a few days before the default put any such potential plan to peril – if the vote was ‘Yes’, the Government would have fulfilled its democratic obligation to people and easily agreed to bailout terms without compromising their position, and even negotiating some. If the vote was ‘No’, the government would come out stronger from the referendum.
So if Eu had any such plans – and some officials have expressed such desires (source) – with the declaration of referendum they were thwarted. So this may easily be counted as a very intelligent political maneuvering by Syriza government.
Now with the vote ‘No’, Eu circles see that even in the wake of their economic assault, Greek government’s support not decreased, but increased.
Strengthens Syriza Government’s Negotiating Power
Now Syriza government can sit on the table with a stronger hand – despite everything that was inflicted on Greece, they have higher support from their people AND a direct, blunt refusal of the Eu bailout plan.
Direct mandate of the people.
It doesn’t get any more democratic than that.
Now no kind of argument which can be used by creditors against Greek government from political aspect is null and void – they have strong backing.
This brings a lot of negotiating power to the table for Greeks. They can now push Eu to agree to more humane bailout terms – Eu was going as far to have Greek government cut aid for retirees living under 400 EU/month, increase retirement age to 67 from 61 despite Germany’s own retirement age is 61 itself.
Syriza Government is now here to stay
Now either through an acceptable deal from Eu, or through duking it out, Syriza government is here to stay.
This opens up a lot of possibilities for Greece – the Turkish Stream Project Russia is undertaking is to complete its first pipelines in Dec 2016, and is going to pass from Greece. (source)
This, when completed, will not only bring massive revenue to Greece, but also give a very strong geopolitical card to play with any negotiators. Before the fact that the transit revenue itself would be a major factor in any financial negotiations.
Getting into this project together with Turkey also relaxes pressure on Greece military-wise, since its quite difficult to have bad blood with a country with which you are making immense profit together. The traditional Turkish-Greek stampede which regularly happens in Aegean sea may continue to happen, but the justification for huge military spending against each other fades away with the pipeline project.
Even more funds and bargaining power for Greek government.
BRICS can now enter the scene
Referendum shows strong backing for Greek government and anti austerity sentiment.
This not only strengthens Government’s position in the eyes of non Eu political entities, but also makes a lasting and peaceful deal in between Eu and Greece less likely.
So through Grexit (Greece exiting Eurozone) or any other means, Greece may – and now can – look for other sources than Eu interests to help its financial problems.Considering how Greece was invited by Russia to join BRICS bank (source) recently, referendum result gives the Government the go card to get about going independent of Eu interests.
BRICS Bank may also demand various conditions from Greece for loans, however considering how it was founded as a means to replace IMF and provide a means to participating countries to evade political demands pushed by IMF, its highly unlikely that the demands will be anything Greece would hesitate from.
Very specifically, BRICS do not push privatization of public services and industries as a prerequisite for loans – neither they demand abolition of social security or workers’ bargaining rights.
So Greece can easily get along well in the BRICS club.
Strong Anti-Austerity Statement
Referendum vote basically yells that, despite all kinds of scaremongering and ‘punishment’, the austerity inflicted upon Europe by Eu interests is highly unpopular and unwanted.
This naturally confirms and strengthens Anti-Austerity sentiments elsewhere in Europe, and encourages anti austerity political movements.
Especially the No vote despite economic assault by ECB and political assault by Eu political figures – to the order of forcing bank closures – means that the public had enough suffering from austerity, and is willing to go through a measure of hardship to get out of it. The political parties that are anti austerity can come up with stronger demands and stronger statements by taking into account this factoid.
Considering how Syriza and Spain’s Podemos are already cooperating, solidarity and cooperation among anti austerity movements are slated to increase even more.
Unpopular policies creating Anti-Eu SentimentsFrom immigration to other minor issues, there is already anti Eu sentiments in many countries inside Eu. There are even a few who took the debate to their parliaments, like the recent Austrian petition which garnered over 200,000 signs and forced Austrian parliament to start debating an Eu exit, per law. (source).
Naturally, the near-sociopath austerity Eu is forcing upon Greece and other countries is fueling any Anti Eu sentiment in these countries. When the general public is suffering under austerity while retirees have to make do with even more cuts and survive with diminishing pay, or school children having to do with one meal a day, its hard to see Eu project as successful.
If, the Eu creditors do not relent on their near-fixated insistence on forcing Greece to disastrous austerity terms for financial assistance, this can even damage the perspective people in countries in Eu which are not affected by crisis – Eu would come to be seen as a ruthless institution which puts profits and financial concerns in front of people’s lives.
In the end, what is being done to Greece can be done to any country – since any country can end up in economic crisis due to any unforeseen factor.
The No vote is an indicator of Big Change. From resurgence of popular movements against Neoliberalism to failure of EU project for valuing profit over people.
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