Lacking Importance of the Greek Referendum of 5th July, 2015
(in English language only)
von/by Dr. Christian Heinze
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pro-re-publica.eu
2015 07 08
| 1 | The referendum. |
| 2 | The Greek people were asked by their government to vote, on 5th July, 2015, by referendum, on the following question: |
| 3 | „Πρέπει να γίνει αποδεκτό το σχέδιο συμφωνίας, το οποίο κατέθεσαν η Ευρωπαϊκή Επιτροπή, η Ευρωπαϊκή Κεντρική Τράπεζα και το Διεθνές Νομισματικό Ταμείο στο Eurogroup της 25.06.2015 και αποτελείται από δύο μέρη, τα οποία συγκροτούν την ενιαία πρότασή τους; Το πρώτο έγγραφο τιτλοφορείται «Reforms for the completion of the Current Program and Beyond» («Μεταρρυθμίσεις για την ολοκλήρωση του τρέχοντος προγράμματος και πέραν αυτού») και το δεύτερο «Preliminary Debt sustainability analysis» («Προκαταρκτική ανάλυση βιωσιμότητας χρέους»).“ |
| 4 | Which is in English:
“Should the plan of agreement be accepted, which was submitted by the European Commission, the European Central Bank, and the International Monetary Fund in the Eurogroup meeting of 25 June 2015 and comprises two parts, which constitute their unified proposal? The first document is entitled ‘Reforms For The Completion of the Current Program and Beyond’ and the second ‘Preliminary Debt Sustainability Analysis.” |
| 5 | (source https://en.wikipedia.org/wiki/Greek_bailout_referendum,_2015#/media/File:Greece_2015_referendum_ballot.png) |
| 6 | The referendum does not refer to any official publications, either by
Greek or by European instances, of the two documents quoted in it.
Unofficial versions were not easily available to the Greek people. They
could be found, however, by search the internet, as a publication by
Fortune magazine, under the addresses https://fortunedotcom.files. wordpress.com/2015/07/reforms.pdf and https://fortunedotcom.files.wordpress.com/2015/07/dsa.pdf respectively. These publications are reproduced as Annexes A and B to this paper. |
| 7 | A meeting of ministers of 2th June, 2015, is referred to in an internet-blog at the address http://blogs.ft.com/brusselsblog/2015/06/25/leaked-greece-bailout-plan-sent-to-eurogroup/ reporting: |
| 8 | “The ministers have been sent what one official termed a “feasibility blueprint” – but the Financial Times has obtained a copy and it looks very much like the version creditors annotated and sent back to Athens on Tuesday. We’ve posted a copy of the document here.” |
| 9 10 |
The author was unable to find a link actually leading to a copy of the
Document mentioned. Concerning the plan of the referendum, however, the European Commission has given the following information, published in the internet under the address http://europa.eu/rapid/press-release_IP-15-5270_en.htm: “Brussels, 28 June 2015 In the interest of transparency and for the information of the Greek people, the European Commission is publishing the latest proposals agreed among the three institutions (European Commission, European Central Bank and International Monetary Fund), which take into account the proposals of the Greek authorities of 8, 14, 22 and 25 June 2015 as well as the talks at political and technical level throughout the week. Discussions on this text were ongoing with the Greek authorities on Friday night in view of the Eurogroup of 27 June 2015. The understanding of all parties involved was that this Eurogroup meeting should achieve a comprehensive deal for Greece, one that would have included not just the measures to be jointly agreed, but would also have addressed future financing needs and the sustainability of the Greek debt. It also included support for a Commission-led package for a new start for jobs and growth in Greece, boosting recovery of and investment in the real economy, which was discussed and endorsed by the College of Commissioners on Wednesday 24 June 2015. However, neither this latest version of the document, nor an outline of a comprehensive deal could be formally finalised and presented to the Eurogroup due to the unilateral decision of the Greek authorities to abandon the process on the evening of 26 June 2015. IP/15/5270“. |
| 11 | The media have interpreted this state of affairs as a withdrawal of the suggestion of the plan in question by the Euro-Group. |
| 12 | Of the 61,5 % of the Greek people eligible for voting and taking part in the referendum, more than 60 % answered the question asked with “no”, almost 40% with “yes” (37% and 24% respectively of the population eligible for voting). |
| 13 | Meaning of the “plan” referred to in the referendum. |
| 14 | The two papers purported to have been submitted to the Euro Group on the 25th June, 2015, can be interpreted as containing a plan for reforms including legislation and executive action to be undertaken by the Greek government under the terms of an extension of 20th February, 2015, of a certain “MFAFA” as part of an integrated three pillar project comprising financial arrangements and support from European partners including financing of the Greek government meeting immediate obligations and of Greece regaining market access. Financing is referred to as a “lending arrangement”. |
| 15 | The plan provides for the Greek government “to implement the list of reforms through a vote in parliament in a matter of days” designed “to deliver the agreed fiscal targets”. It is planned to “get people back to work”. The list of reforms contains a comprehensive description of legislation to be passed and executive action to be taken by the Greek government. In some instances, a concrete framework is defined for the substance of laws to be passed and action to be taken, leaving limited room for Greek organs to exercise decisive discretion. However, with reference to the bulk of the action provided for, the plan allows for interpretation and implementation within a more or less wide qualitative and quantitative regulatory scope. The paper does not seem to allow a complete waiver of any one of the specific parts of the plan; they are required to be implemented as a whole. |
| 16 | The Debt Analysis, exceeding its headline, contains “an extension of the current EFSF financial assistance programme”. It then refers to a 2012 EG framework for debt and could be understood as promising help for a reduction of the Greek national debt. It mentions reasons for the recent deterioration of the Greek economic and budgetary situation and remedies to be planned and described by very broad criteria such as “growth effects” or “privatization”. |
| 17 | To sum up: As far as can be gathered from the papers mentioned in the referendum, the Greek people was called upon to vote on whether Greece should accept a comprehensive plan implying financial lending by and financial benefits for Greece, both at inestimable amounts, on condition of a number of measures to be taken as a whole by Greece and supervised by European instances which would shape its economy in a basic way, or whether Greece should renounce the opportunity of receiving financial aid for the solution of its fiscal problems. |
| 18 | The outcome of the referendum has, however, been widely interpreted as a pronouncement of the will of the Greek people, more or less biding on the Greek government, that the measures described in it, which would certainly cause a considerable reduction of Greek living standards, should not be taken. |
| 19 | Evalutation. |
| 20 | The following chapter undertakes to describe the meaning of the referendum exclusively from the point of view of its importance for the discussion, whether or not and under which conditions and in which form and amount, financial aid should be extended to Greece or to Greeks by European and particular Euro-Countries in the future. This importance is constituted by interests and considerations or obligations entertained by the European Countries and their people. |
| 21 | International economic partnership and statehood. |
| 22 | In such an evaluation, prominent rank belongs to the interest in the capability of Greece of participating in international economic exchange and particularly in the common market of the European Union, because the question of extending financial aid to Greece arises from the insufficient economic and financial state of Greece endangering this capability and participation. The capability is crucially reduced through the inability of Greece to offer goods or services at a quality, quantity and price meeting existing demands within or without Greece, as would cover the cost of the living standard required by the Greek people (lack of competitiveness). As a consequence, Greece and some Greek parties are unable to repay national and private debts that have accrued to the amount of more than twice the annual Greek national product. This capability cannot be restored by the extent to which financial aid would be used for a reduction of the national debt, and it cannot be restored either with the help of additional financial aid used for filling the gap between current national income and spending, because both would not restore Greek competitiveness. Only insofar as aid would surpass the amounts needed for these two purposes could it help to recover the capacity in question mainly by subsidizing costs of living during a stage of economic recovery and by helping productive efforts including investments. |
| 23 | In this respect, the “no”-answer to the referendum does not necessarily indicate a refusal of measures needed for such recovery altogether and not even of specific measures as mentioned in the plan referred to in the referendum, but only the refusal of incurring additional debts and the refusal of an infringement on the power of Greece to define the individual measures or their composition. The refusal of increasing debts, be it for the repayment of existing debts, be it for equalizing the state’s budget on the future, be it for helping economic recovery or transitional alimentation favours the true interest of the Euro-Countries because, given the inability of Greece to repay her debts for decades to come, aid would amount to transfer and loss. Describing aid as credit would, regardless of questions of legality or legitimacy of incurring “debts” that cannot be repaid, amount to an act of deception and self deception which would damage further the true interest not only of the Euro-Countries but of Greece as well. Filling the gap in the budget of the Greek government does not promote an advantage for the Euro-Countries. The desire of Greeks to determine themselves the necessary economic measures, is not as such inconsistent with the interest of the Euro-Countries, because it may promise even better results than the plan developed by them. |
| 24 | It follows that the outcome of the referendum, be it yes or no, does not prejudice in any way the economic and financial behavior or legislative power of the Greek people or the powers of any Greek government organs necessary to restore the equilibrium of expenditures and income of the Greek people and of Greece and to restore, thereby, a status of Greece as a viable partner for international economic and financial and even political relations in general. In particular, this government is not prevented by any outcome of the referendum from negotiating financial help under different conditions than those described in the referendum. |
| 25 | Partnership in the European Union. or capability of international parntnership in general |
| 26 | The referendum as such damages the capability of Greece for partnership in any international relations which is a requirement for the very existence as a State. This is because such partnership requires the sovereign power of government to cope with problems like such as derive from disequilibrium between public and private spending and public and private income endangering government itself. Given the wide scope of the measures presented for referendum as a whole and covering most central sectors of economic and financial policy, the government signals, by asking for the vote of the people, its own political disability of deciding on and/or enforcing the individual measures constituting the necessary policy by virtue of its sovereign power. If not just some particular individual measures but the whole entity of individual measures essential for economic and fiscal policy of a country would require the vote of the people, then this people would not possess a government, it would cease to exist as a State. Greece could avoid this consequence not by negotiating but only by actually introducing immediately, by virtue and force of its own sovereignty, such effective legislation or executive action as necessary to reestablish equilibrium between spending and income of Greece and its people. |
| 27 | Additional requirements apply to membership of Greece in a European Union. As far as they comprise equalization of spending and income, this requirement may be limited by allowing for certain transfers of the sort of social redistribution or compensation for unchangeable economic or natural preconditions varying in different parts of the union or for caritative aid within the limits of their own potential. (It is another question whether the Union as a whole observes those limits.) Outside and above such limits, however, homogeneity of the system of basically free production and distribution of goods and services (in Europe: market economy) is a basic requirement for membership. Should neither government nor people be willing or able to meet this requirement, membership is doomed to come to an end. The referendum does not indicate such a position. The Greek government asking for the referendum, does not prove its (impending or purported) lack of sovereignty (it has not tried to bring about enactment of any of the individual measures required to restore economic equilibrium and has therefore not proven inable to do so). The referendum can be explained as a tactical move to cause (be it erroneous) impressions in its own people or in other countries facilitating its policy. And the Greek people would not have, as outlined above, by voting yes or no in the referendum, expressed their unwillingness for an economic behavior compatible with membership in the EU. Not the referendum but the factual behavior of the people or their government promotes the already existing situation of disequilibrium of the economy to one that would end Greek partnership in the EU. |
| 28 | Another requirement for membership in the EU is usually described as a constitution of democracy and of rule of law. Both principles are damaged by the referendum. |
| 29 | The democratic principle is distorted by an attempt at making voting results appear as an expression of the will of the people, when the question voted upon is as widely detailed and as open to interpretation and as remote from possible comprehension by the voters as derives from the outline given above in respect of the Greek referendum of 5th July, 2015: The referendum in question lacks democratic validity also because it refers to an offer or request from the Euro-Countries, the very existence of which, as derives from announcements of the Euro-Group, is at least doubtful. It further lacks democratic validity because it describes the plan on which the people are asked to vote by reference to headlines of two documents of which no official publication exists or is referred to in the referendum and an inoffical version if which can not be traced by the public, be it in the internet or elsewhere, and particularly not in official publications, even with some effort. Even insofar as papers edited under the headlines mentioned are said to be able to be traced as quotations by Greek government instances in the internet (“Wikipedia”), the referendum lacks democratic validity because their content is largely unclear, particularly because of their use of vague notions subject to almost unlimited interpretation such as investments for “stabilization of economy”, “arrangement” for regaining market access, “increasing employment”, “social inclusion initiatives” and because they refer, for the definition of almost all details of the plan in question, to instruments like “MFAFA” or “EFSF programs” or “2012 EG framework” or “GLF” which are not sufficiently known to the voting public and which cannot, even with some effort, be traced in their wording in the internet or otherwise. |
| 30 | The rule of law is endangered by the assumption of an answer to the referendum possessing binding quality comparable to that of a law. This is because the answer to the referendum does not eve come close to attaining the degree of precision required by any law and because the substance which can at best be derived from it by interpretation is not covered by the will of the people unable to sufficiently understand the question put to them but expressed by direct voting as distinguished from parliamentary legislature through indirect democracy. Another defect from the principle of the rule of law is contained in the lack of publication of the full substance and meaning of the answer to the r eferendum amounting to a binding act. An official publication in a manner and reliable form securing the possibility for everyone subject to its binding effect to take notice of its full and exact contents and meaning is another requirement of the principle of the rule of law, lacking in the case of the referendum in question. This attempt at creating law is also inconsistent with the principle of division of legislative, executive and judicial powers which can be understood as forming part of the principle of the rule of law. This is because a binding plan as referred to in the referendum would curtail the essential power of government to initiate legislation. In addition, given the inability of Greece to repay even debts already incurred for many decades to come, the yes-vote on additional debts, even if it were democratically valid, would be incompatible, if not with international law because of its obviously intended damaging effect on the economy of the lending States and their peoples or its intended creation of error in the true nature of so-called “lending” as financial transfer, it would mopst definitely be incompatible in any case with basic public interests of constitutional importance for Greece in its capacity as an international partner. |
| 31 | The adherence of Greece to the principles of democracy and the rule of law would come under additional doubt through a judgment of its Supreme Administrative Court allowing the referendum as an act of direct democracy contravening a constitution of representative democracy or even allowing its disobedience to fundamental democratic principles (the position of the Greek judgment reported to have actually been given remains to be examined in detail). |
| 32 | An individual violation of the principles of rule of law and of democracy embodied in the referendum would not destroy but may put in question the fulfillment by Greece of the respective requirements for membership in the EU. |
| 33 | Partnership in the community of the Euro-Countries. |
| 34 | Contemporary political debate appears to be widely based on the assumption that Greece cannot remain a member of the Community of Euro-Countries without receiving additional financial aid. It would follow that a vote on refusing such aid entails the necessity for Greece to leave that community and introduce a national currency of its own. Such a conclusion would not be valid because, in the first place, the no-vote does not reject financial aid but the conditions to be attached to it. And secondly, no serious attempts seem to have been made to consider whether the Euro-System is linked or must necessarily be linked with a right of member States to borrow Euro at their discretion. At first sight, such a rule would not appear compatible with a currency system designed to provide monetary stability. It is normal for a currency system to function for a society of rich and poor, honest and dishonest market participants. Even if a link of the sort indicated would exist, the Euro system would be open to and would require an adaptation of its rules and practices to cope with a situation and behavior of a market partner like that adopted by Greece. Such adaptation would, beyond helping Greece, actually serve the interest of all Euro-Countries and might even prove essential for a survival of the Euro-system. |
| 35 | Summary result. |
| 36 | As a result, the outcome of the referendum, be it yes or no, does not prejudice in any way the economic and financial behavior or legislative power of the Greek people or the powers of any Greek government organs necessary to restore the equilibrium of expenditures and income of the Greek people and of Greece and to restore, thereby, a status of Greece as a viable partner for international economic and financial and even political relations in general. It does not rule out continued membership of Greece in the Euro-Zone. |
| 37 | However, the unhelpful adventure of the referendum of 5th July, 2015, retains some value by giving a hint as to what the Greek government should probably ask its people, namely: is it prepared to suffer the consequences of certain precise actions to be planned by the government in order to reduce government and/or private spending and/or increase the financial means at the disposition of the Greek government, as there are, for example, collecting all due taxes, regulating taxes equally, increasing them and particularly VAT as necessary, reducing social transfers including pensions, reducing the number of public servants or even following the example of the government of the Greek Republic of South Cyprus by devaluating internal private claims (to avoid leaving the EURO- Zone and relying on a new national currency). However, it does not even take a referendum to ask such questions. It suffices for the Greek government to introduce the necessary bills to parliament for enactment and to take the necessary executive action within its competence. |
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