On Friday, Greek prime minister Alexis Tsipras called for a public vote on the troika-creditor-institutions' take-it-or-leave it offer, an offer that included pension cuts that Syriza came to power explicitly rejecting.
Yesterday the troika-creditor-institutions rejected a one-week extension on loans coming due in order to allow the Greek government to conduct the referendum on July 5.
This morning the European Central Bank (ECB) announced that it will freeze Emergency Liquidity Assistance (ELA) to the Greek banking system. Given that lines have formed at ATMs since Tsipras' announcement of a referendum on Friday, for the ECB to freeze ELA puts the ball back in Syriza's court. Tsipras will now or very shortly have to impose a bank holiday and then capital controls.
Greek finance minister Yanis Varoufakis posts this morning on his blog a summation of the breakdown in talks in Brussels, "As it happened – Yanis Varoufakis’ intervention during the 27th June 2015 Eurogroup Meeting," which he prefaces as follows:
Varoufakis makes several substantive points. He basically outlines why it is the Greek government wants to hold a referendum: because the troika-creditors-institutions' take-it-or-leave-it offer is an "austerian" proposal that covers a mere five months and therefore guarantees no stability; the Syriza-led government commanded a 40% plurality of the vote last January; hence, the public needs to be consulted. Here is where Varoufakis' statement gets very interesting:
On the question that will be put to the Greek people, much has been said about what it should be. Many of you tell us, advise us, instruct us even, that we should make it a Yes or No question on the euro. Let me be clear on this. First, the question was formulated by the Cabinet and has just been passed through Parliament – and it is “Do you accept the institutions’ proposal as it was presented to us on 25June in the Eurogroup?” This is the only pertinent question. If we had accepted that proposal two days ago, we would have had a deal. The Greek government is now asking the electorate to answer the question you put it to me Jeroen – especially when you said, and I quote, “you can consider this, if you wish, a take or leave it proposal”. Well, this is how we took it and we are now honouring the institutions and the Greek people by asking the latter to deliver a clear answer on the institutions’ proposal.
To those who say that, effectively, this is a referendum on the euro, my answer is: You may very well say this but I shall not comment. This is your judgement, your opinion, your interpretation. Not ours! There is a logic to your view but only if there is an implicit threat that a No from the Greek people to the institutions’ proposal will be followed up by moves to eject Greece, illegally, out of the euro. Such a threat would not be consistent with basic principles of European democratic governance and European Law.
To those who instruct us to phrase the referendum question as a euro-drachma dilemma, my answer is crystal clear: European Treaties make provisions for an exit from the EU. They do make any provisions for an exit from the Eurozone. With good reason, of course, as the indivisibility of our Monetary Union is part of its raison d’ etre. To ask us to phrase the referendum question as a choice involving exit from the Eurozone is to ask us to violate EU Treaties and EU Law. I suggest to anyone who wants us, or anyone else, to hold a referendum on EMU membership to recommend a change in the Treaties.These debt negotiations have always been primarily political and much less about the technicalities of repayment. The IMF itself, the institution that Tsipras has singled out for making unreasonable demands of sacrifice by the Greek people, has acknowledged that austerity has damaged the Greek economy. But neoliberal orthodoxy foresees a low-growth future where the only guaranteed profits to be had are in the further cannibalization of the public sector. Syriza's people first mantra is an existential threat to the neoliberal hive mind.
Since negotiations began this past winter the goal of the parties has been to make the other side throw the first punch and appear as the aggressor. So, given this framing, I think Greece has already won. The troika-creditors-institutions refuse to allow an extra week for a public vote. They have ended negotiations. What are they afraid of?
Clearly the fear is of democracy. As Varoufakis notes above, Syriza would pose the question as a Yes or No on the eurogroup's proposal of June 25th, not on whether to stay in the eurozone. The short run up to the vote next Sunday would not allow for the necessary fearmongering and manipulation to sway the electorate, as the neoliberal orthodoxy was able to do last September in the Scottish referendum on independence. The troika-creditors-institutions saw this and denied the public vote, and have now frozen ELA to force Syriza to implement capital controls, as was done in Cyprus. The hope in the eurogroup is that Syriza will then lose popular support, forcing Tsipras back to the negotiating table humbled.
The troika-creditors-institutions wants Syriza broken and discredited; absent that, they want Greece out of the eurozone. Capital controls are not the end of the world. Cyprus survived. Greece will too.