10 Jul 2015

What was the point of Tsipras referendum?

The new Greek government proposals, published late last night are clearly based on those submitted by Jean Claude Juncker last Thursday, before the referendum.

It’s left many Greeks frustrated,  asking: what was the point of the referendum? It’s left many foreign observers saying the same.

Here are the most obvious answers:

First, the Greek government’s hope that a referendum mandate would allow swift negotiations with their creditors, and relaxation of terms, did not materialise. Instead a renewed ultimatum materialised. If they can’t meet it, the ECB and EU will collapse the Greek banking system and throw them out of the Eurozone. Indeed, one of the main “achievements” of the referendum was to flush out that clear threat, from politicians who had never admitted it before.

The Greek government has no mandate to leave the Euro, as the 61% vote No last Sunday was clearly won as a “stay in and fight” mandate.

Secondly, the deal makes no economic sense without debt relief. The referendum, combined with US pressure, seems to have prompted key European voices, including Angela Merkel and Donald Tusk, accede in principle to the need for debt reprofiling – which is a sneaky way of writing off debts.

Thirdly, it is still redistributive on balance. Syriza can still sell this as a very different programme from those previously designed by the conservative led coalition. 29% corporation tax is one example. However it does make concessions on pensions and on VAT on the islands, which currently enjoy a discount.

Fourth, it is the work of Euclid Tsakalatos. Tsakalatos, as I’ve been explaining since mid-January, is existentially committed to two things: Euro membership and the use of government to foster widespread modernisation and social change. He wants to stay in power – not lose it to a government of “technocrats”.

Fifth, the deal comes with a request for a loan to make Greece’s debt repayments over the next three years. If someone else pays your debts for three years, that is a very fiscally beneficial thing, and leaves Greece with money to spend it did not have. 

Most importantly, this is not a done deal. If it gets through the Greek parliament and is then thrown back into the Greeks’ faces it will solidify and prepare Greek society for Grexit.

It will most likely prompt a few resignations from Syriza, but I am told the Left Platform in Syriza will mainly accept it. But getting it through parliament is not the problem. Getting it through the EU is the problem – and it’s left many Greeks still predicting this is the last gamble before Grexit.

32 reader comments

  1. Lynda smith says:

    Paul Mason is, as usual, bang on the money, keeps us informed and up to date on all the cogent points, I was awake at 3am this morning, and there he was, still tweeting, thanks Paul.

    1. sonny says:

      I do not quite get it with the hypes and spins of the Greek economy. What has happened to the working people and Businesses? Are they not paying Taxes? Do they any commodities to attract income, such as Oil, Gas, Gold and marketable products. What has happened to their money? If there is no money, then people just have to live a cheaper life, and probably behave as if there was a natural disaster, God Forbid please let it not happen. The Government has to behave that the country has been flattened and every one has to get together and start rebuilding. Get out of any organisation where payment has to be made for membership. If there is no collateral of significant that no other country is interested in then security risk would be low. The natives of Greece should now start to conduct their activities as if their Country has just been discovered. Slowly they would get out of bondage and in time emerge as a place that attracts outside investment and interest and resurface as a nation of intrigue and well endowed.

  2. lisa says:

    I’m afraid that these points are false.
    On your first point, the EU/ECB will not collapse Greece and throw it out of the EU; Greece has achieved that itself by walking out of negotiations and now requiring an entirely new programme and a new mandate from all other democratic legislatures, which strategy made no sense.
    On your second point, debt relief was always on the table with first payments only being required WAY down the line. Debt relief will not effect the Greeks anyway as things currently stand (and was always foreseen with low rates and payments deferred).
    On your third point maybe the government will try to sell it as a different programme, but it isn’t.
    On your fourth point, please do not forget that Tsiparas is the leader of the government and was so last week when he called the referendum, which did little but to worsen Greece’s financial situation.
    On the fifth point – all the more reason for other democracies to reject it, which the people are doing, European wide. The Euro is now being soundly rejected for Greece by the populations that formerly supported it. And who can blame them?

    Lastly, this most definately isn’t a done deal. Even if the European group buys what Greece is selling, no one trusts in their good will.

    1. Jim Bennett says:

      Well, there’s little problem in distinguishing Lisa from a ray of sunshine, is there?

    2. gilles says:

      And you are Snowy White. You slept under a stone for a hundred years and have just been kissed awake by Prince the Wayislost.

  3. Wolfgang Knorr says:

    Paul, you sum it all up so well! Good to see sensible and well-informed people like you reporting on the Greek events.

    I think what applies to Tsakalotos applies to Tsipras as well. My worst fear last week was that the government would fall and that we would go back to the reckless policies of the previous one.

  4. Fotis Kollias says:

    We, Greek people, must be delivered a some kind of post evaluation in terms of negotiations that have taken place so far by Syriza because if we end up with the conclusion that a great deal of time was waisted then everything went wrong. It’s not a matter of left or right wings in our parliament but how things had to be done in the right time.


    Fotis Kollias

  5. Deutscher EU-Austritt says:

    “Secondly, the deal makes no economic sense without debt relief. The referendum, combined with US pressure, seems to have prompted key European voices, including Angela Merkel and Donald Tusk, accede in principle to the need for debt reprofiling”
    Not only does Mr Tusk have nothing to say about inner euro zone issues, it is also a bizarre idea that Merkel looked at the outcome of a referendum which everyone in Germany regarded as in irresponsible, hopeless behaviour and said ‘hey, now they need debt relief’. Angela Merkel is an US stooge, a member of the Atlantik-Brücke (‘Atlantic Bridge’) organisation, as is German President Joachim Gauck. Apparently you refuse to see that she carried out US orders all over the last years (making sure that Greece stays in the EU and NATO) and used German tax money for this purpose.
    She is simply afraid to admit that all of the money is lost, not because of her career, it’s just that Germans could start turning to radicals, too, if they discover that they are in a Treaty of Versailles situation, funding the geopolitical aims of other powers.
    And then Europe could be remembered how a real German fascist looks like. One who gangs up with Russia. Isn’t it nice that she wants to avoid that?

  6. Craig Grapsias says:

    Lol what a fraud Tsipras is!

    So he’s basically gone back to the EU after his party & the Greek party rejected the same deal weeks ago & drawn up the same proposal.

    He should be arrested & trialled for treason.
    A sellout,a fraud,a disgrace apon the Hellenic Republic.

  7. John Kerr says:

    Another perceptive and informative piece. Thanks.

  8. Christopher Wicks says:

    It does look like finally Greece will cave in which for me is sad. Piling on more austerity now seems so pointless… The local businesses in our rural, touristic mainland area are already wrung dry… Most stopped issuing VAT receipts a while ago as they cannot survive if they do… They re scraping by paying TEVE insurance and property taxes as it is… So nothing will change there, neither will the exodus of the young Greeks stop. The good thing is for SYRIZA to stay in power with some national consensus and make the structural reforms… (in the UK I’m a liberal -conservative) but here I cannot help but support this Government for it’s honesty and integrity. So I guess to Grexit at this stage is just to risky…. But it seems like our Greek neighbours and friends, good hardworking but poor people generally, have been banged up again in Colditz castle, but perhaps now they will start digging their tunnel!! Thank you for you down to earth excellent reportage!

  9. kathleen says:

    Thanks. Very interesting.

  10. Francisco says:

    Tsipras is the new Ephialtes. This is a capitulation all around and more than that it goes directly against the OXI in the referendum. This is a new MoU even worse than the ones before, with a “make belief” promise of debt relief that nobody now how much and when it will be implemented.
    All left and patriot greeks must fight with all their strength and by any means against this Treason!

  11. Tim Niblett says:

    You’ve missed out what I suspect to be the real reason. Syriza couldn’t get the original deal through parliament without breaking up. The Syriza leadership expected to lose the referendum and bow out with an intact party. Winning it gives Mr. Tsipras the clout, perhaps with other parties, to force a deal through parliament and keep (most of) Syriza together.

    Syriza, with whom I had much sympathy in January, may now have a deal which is worse than they could have had in February. The canary in the coalmine for me is that they have made _absolutely no_ progress towards rebuilding the corrupt Greek state. All showboating and no action as far as I can see. This, for me, is the touchstone by which they should be judged and they’re failing. There’s no indication that the rebuilding of the state is anything more than undergraduate rhetoric.

    If I’m wrong please let me know. Signs that Syriza are trying to do their real job would be most encouraging.

  12. Insurgent Democracy says:

    Eurozone crisis news update: The Moment of Truth, Greeks Fight the Good Fight. How Will It End?

    Greece has the devil’s dilemma:

    1. If they want to remain in the Eurozone under the control and command of the euro then they demand more concessions from the Troika in order the reduce the economic pain,especially a drastic 30% debt cut and recasting the debt on longer sustainable repayment terms which probably won’t happen to any degree that really helps the Greeks;

    2. or, get out of the Eurozone, the pain will still be there but the economic healing will result in national sovereignty over their economic fate.

    Either way there will be pain and suffering for the Greeks. But, hey, that’s not news to a people who’ve suffered already.

    As the old saying goes: “What doesn’t kill one, makes one stronger.”


  13. Henry David says:

    “…the deal comes with a request for a loan to make Greece’s debt repayments over the next three years. If someone else pays your debts for three years, that is a very fiscally beneficial thing, and leaves Greece with money to spend it did not have…”

    oh, really?
    now that sounds like a completely new idea in the Greek game…
    Loans for debt repayment. Pure genius!

  14. Chris Piché says:

    The change here appears to be one of attitude or the mood around debt relief. There’s a shift in the hardline European position to a softer one while they still save face with tough austerity language. This is like a fight where the Greeks kept punching them in the gut to soften them up. That was Varoufakis’ role in a room full of bullies. He stood his ground. It worked. That was a sacrificial role.

    It’s also clear that much of Syriza and the Greek people have no stomach for a disorderly fallback plan, if there is one besides collapse. Nor do the Communists, Colonels or Golden Dawn have the power to impose the controls which would be needed to stop a descent into anarchy or win a civil war.

    It’s last weeks show of bravado through referendum, versus the real fear of being cast off with no where to go. The hell below looks worse than the light above. The mood has also shifted in Greece. Political shifts are soon to follow. Syriza will move center-left to capture more power in a post-crisis period if the “deal” goes through.

  15. Lunarcy says:

    Paul Mason is an oasis in a desert of media mediocracy.. most of which is of course owned by the very same elite that seeks to consolidate control.. of everything, not just Greece.

  16. michael says:

    For those of us who voted to join the EEC in 1975 there was a point to a referendum. There will be again in 2017 we are told.
    The most telling point of the Greek referendum is that it was organised within a fortnight.
    The Battle of Britain today is between Politics and Efficiency. Answers by carrier pigeon please.

  17. Dave Hansell says:

    The key point of this piece is in Paul Masons penultimate paragraph.

    The referendum tactic has at last succeeded in getting the key members of the Troika to make public their obvious stance that unless they get their way in the mardy tantrum they are having they will force Greece out of the Euro zone.

    Remember, before the referendum was called the signs were that a deal was on the cards until the Troika decided to not accept it and go for more concessions from those least able to bear them.

    The further concessions given by the Greek Government seem to be based on the belief that no matter what concessions they offer they will be rejected because in the view of the Greek negotiators the real agenda is to set the precedent of expelling a Euro zone country out of the Euro zone to rectify the initial error of letting them be a part of the zone in the the first place.

    Having set that precedent it will make it easier for those states at the centre of the euro zone to systematically remove the other periphery economies in order to retrench and try to save the project by concentrating on the core economies.

    In this scenario, which it seems plausible the Greek Government believe is the case, there will be no deal from the Troika if and when the current deal is passed by the Greek Parliament.

  18. JimOverton says:

    Would be interested in hearing your take on Schauble’s assertion that debt cancellation “is not allowed because of EU rules”…? if this is correct, to what extent could Greek debt be re-scheduled/discounted …?

  19. Joshua says:

    It very well maybe that despite Tsparis’s statements, that he wants to have Greece exit the Euro. it is actually probably the best thing for Greece. They can then use devaluation of their new currency to drive the country into becoming more competitive and enticing for businesses to setup shop.

    The Greek people are in for a lot of austerity either way. But doing it the EU way, while it will keep them in the Euro, will probably take more time to allow for a recovery.

    However politically it seems no one wants to say they took/drove Greece out. Rather it was someone else’s fault. Tsipras is lining up Germany to take this fall for Greece. Germany with the help of some others is lining up Greece to look like they could never get their act together and thus in reality threw themselves out of the Euro.

  20. Tony Walker says:

    According to Larry Elliott, Tsipras and Syriza’s strategy and behaviour was pointless and I agree with him. Sadly, Paul Mason has become an apologist for Syriza, like the moth he has flown too close to the flame and his objectivity has perished which is a shame.


    Michael Roberts agrees with Elliott:


    Syriza based its strategy purely on the moral force of ‘democracy’ delivered by its electoral mandate and the No vote in the referendum. The Troika does not respect ‘democracy’; it respects only profit and protecting the wealth of the rich.

    Syriza had no material force to support its naive belief it could challenge the Troika and austerity. It made no effort to organise and prepare the working class to take control of the key industries of the financial system, food distribution, transport, energy, the media and water. Without control of those, survival, let alone ‘Grexit’ is and was impossible.

    The only positive outcome of this sad and predicted failure of left-reformism is that the military has not moved to seize control and repeated the experience of Chile in 1973.

  21. Jim McMorrow says:

    I believe the Greeks had the referendum because of a word that the Troika and EU seems to have forgotten about…that word is “democracy”

  22. dee says:

    In the very place democracy was born we now see it die ….. There no longer is any democracy within the EU. It does not matter how you vote since the leaders of the EU will threaten and force the hand of any government. It happened in Ireland as well when they voted no to the Lisbon treaty and where told to vote again.
    This is a threat to all of us not just Greece.

    We know since the 1920’s that austerity does not work and we know that it lead to war.
    Unfortunately it seems we have not learnt any lessons from history and by continuing this path we know that eventually people will rise up when they can’t take anymore.

  23. John Ransley says:

    Tsipras says to the Greek people ‘if you want to stay in the eurozone, you will have to cop even more draconian austerity than you’ve had for the last five years. So do you really, really want to stay?’

  24. Philip says:

    I wouldn’t say ‘nonsense’ exactly as author is evidently well-intentioned and informed…to a point. However, there is a game in play here. Greece cannot remain in the EU. The ref was not about the EU as much as either being on continual life support that is slowly strangling the country or escaping that life support. Greece cannot carry out reforms without resources or incentive. It has neither. Its at the end of its tether. The debt question is a red herring beloved of politicos, financiers and blabbers to avoid the real issue of Greece belonging in the club. She doesn’t and never has done. She is 4/5 mtns 1/5 islands. Like Scot without UK or Norway without oil. No econ resources to develop further, certainly not to a ‘1stworld’ level. All IMF/WB/CIA figures put her as 1st world. She is at best same as Eastern Europe (Balkan) so 2nd world. She’d be better of with nightmare of drachma and deciding her own future than nightmare of EU with Berlin/Merkel deciding her future. Those Greeks who want to stay in EU are ‘free money junkies’ with a delusion of ‘being European’. Her future is uncertain but so is that of the EU and of the ME, not to mention Russia. Everywhere is in upheaval Anglo commentators persist in writing as if quick fixes would solve everything. Not debt relief nothing. We are all looking into an Abyss. The Greeks are simply there first. Germany will lose Greece to save Germany. Tsipras will help the EU kick Greece out. His reforms are unworkable, have been for the last 7 years. Ref was to give him green light to accept Grexit by EU. This will happen if Schaueble has his way. Good. End this EU farce now.

  25. VN Gelis says:

    Original cuts were €8b. Syrizas election promises were $12b. Now they propose cuts of €13b. The referendum was the Graccident. Maybe this was the original plan all along how to propose …left cuts. The debt issue is what Syriza needs to sell the deal to its 17MPs that didn’t vote for the proposal submitted to Eurogroup.

    Governing with the opposition to just impose more genocidal cuts will give govt a short lifespan. Either which way whatever happens next Syriza is a spent political force.

  26. jonathan thorne says:

    I am so impressed with the sensitivity and intelligence of most of the above writers. I fear that I’m about to downgrade the average level of IQ! With every sympathy for the Greeks and the clunky somewhat stupid, second bail-out, I nonetheless believe that as well as Spain, Ireland, Portugal, Cyprus, Latvia,the poor old Greeks are going to have to face consequences of decades of tax avoidance, shocking productivity, even worse governmental financial management,and over-indulgence in their state employment schemes. I daren’t even get started on the original proposal to enter the Euro – flawed, possibly fraudulent, and almost certainly inaffordable.I do have enormous sympathy with the Germans who for the last 30 years seem to be willing to pick up the most outrageous bills: unification, immigration, nation-building, the list is endless.

    sorry if I’ve upset anyone – not my intention

    Bonne chance Greece

  27. Al says:

    Not just Grexit Paul. Many of us former EU supporters have now changed our minds.

  28. George Maglaras says:

    I took the plane from the UK and voted for SYRIZA for the national elections. My circle of friends comprises of several long standing members, supporters and voters. If we had elections today, Alexis would be getting 20% of our votes, tops. We voted for the end of austerity in the Euro, with justice (at last) in Greece and massive pverhaul of the Greek state, making the ones who brought us to this pay. For 5 months we only had tokenism politics. The chance is gone now.
    Truth is, Paul, that SYRIZA never had a plan EITHER for the Euro (as austerity will not only continue but increase) OR for the drachma.
    Our “allies” are supporting us on the basis of the ESM, which means further crippling austerity, for a program which -on the back of the two previous failed ones- will not work, as it is more bad money after bad (loans to repay loans that cannot be repaid) and on a devastated economy and society which can take NO MORE.
    So, we all wonder what’s the use of all this? We spent five months to do what? Prove that the banks, the north european governments and the eurocrat system wants another pound of flesh? We knew that anyway, but it appears Alexis and Co thought we are a “partenrship of sovereign blooming nations”. This falacy will cost us dear, SYRIZA will not be missed when it quickly returns back to 4%. All we regret is that we “placed our bets on the wrong horse”…

  29. George Maglaras says:

    PS: We have been trying to tell them in the party fora that they have betrayed the 62% OXI (which we now see they did not want and cannot handle) and that, at the end of the day, going though 5 months with no plan B or C (or even A) to get to the point of accepting the ESM loan (which is the end of national sovereignty) with a 3rd cripppling memorandum just to prove that the “bad” German government and its poodles want us out (yeah, the sun comes out from the east, we didn’t know that…) and line up our “allies” on the basis of this genocidal alternative is not good enough. Sorry, it’s just a massive failure and please pass this to the party cadres. We will keep trying and they will, definitely, undestand this clearly in the forthcoming elections in 2015.

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