Today the Greeks go for a referendum but
the unlike the Scottish referendum, the question seems unclear; rather it would
be right to say that the interpretation of the question seems unclear. The
Greek people are asked if Greece should agree to the bailout package that has
been offered to it by the European Union, European Central Bank and the
International Monetary Fund. This referendum however practically makes no sense
because the IMF has made it clear that it will not give any more money to
Greece unless it gets what it has been owed. This referendum however is a way
to ask the people of Greece if they are willing to accept more strict austerity
measures or no, this is a very important referendum not for the people but for
the current government. They have come into power with the promise that they
will not accept any more austerity measures while at the same time the
institutes that have been giving Greece the bailout money are not ready to lend
anymore unless the previous loan is paid and the government agrees on more
austerity measures. Because given the present condition, the institutes do not
see them getting their money back and giving more money to Greece will only
mean more trouble for them. If the referendum is voted YES, meaning that Greece
should accept the bailout package (which is actually off the table), then this
will give the current leftist government to try and broker a deal where they
agree to some austerity measures and even though this goes against their
policy, the very grounds through which they were elected, they would have the
backing of the people to actually go ahead with it. On the other hand if the
Referendum is voted “NO” then among some of the things that would happen, first
would be the resignation of the Greek Prime Minister and Finance minister
leading to fresh election with almost no possibility of the leftist party
coming to power again. Apart from this, there will be other things that will
follow the NO:
- Greece will have to leave the Euro zone, if only temporary, because the current debt to GDP ratio is so high that it does not allow Greece’s economy to function in Euro.
- If Greece does exit the Euro Zone and goes back to its own currency then the loan deals will have higher percent of interest given the history of the Greece economy.
- The condition of the Greek economy will become so bad that it will never be able to join the Euro Zone.
- There will be outflow of the youth from the country, as they will bet better opportunities in other countries.
They citizens know that if they vote yes then also, there are going to be problems and if they vote no still there are going to be problems but they have faced enough problems by staying in the euro zone and the last thing they will want is more austerity measures. It is not going to be easy for the Greeks to say yes to more austerity measures. The sudden impulse would lead them to go for a no but given the history of the Greek economy, the lifestyle of the people and the current debt-to-GDP ratio; it would be best for the country to accept partial austerity measures and work towards the payment of the debt while slowly restructure the economy. For this, the Greeks will have to make some sacrifices such as giving up their pension funds and start to work, increase the age for retirement and grow industries that will lead to more export. The restructuring is had and will probably happen over a decade but it is the only solution where these crises do not repeat itself.
