Last July 5, Greece went back to its Athenian roots and did what is considered unthinkable in modern times—let the people themselves directly decide what to do with their country’s huge public debt. And decide they did. In an unprecedented referendum called to determine whether to accept or reject the harsh terms of a third financial bailout, the Greeks voted with a resounding “No!”
Europe’s leaders were aghast. This is not how modern governments are supposed to behave, they protested. A nation’s political leaders are elected, they said, precisely to solve its problems and make decisions in the people’s name—not to pass on to their citizens the burden of finding the best solutions.
By any measure, what Greece’s Radical Left government did was bold and risky. Unwilling to bow to the pressure of raising enough money in time to meet loan repayments falling due, its leaders actively campaigned for a “No” vote in a bid to secure a clearer mandate to negotiate a more just settlement of the country’s debts. Indeed, this was something they could have taken for granted, having been elected into office only last January—precisely on a platform to renegotiate the existing austerity program imposed by the country’s creditors.
But, they wanted this to be a collective decision. They wanted to make sure the people were aware of the consequences of fighting back: Every day that passes without a bailout agreement with the creditors means less money available at the banks to meet withdrawals. Without money, government operations could shut down. The whole country could be plunged into a deep hole from which it may not be able to crawl out.
A “Yes” vote, on the other hand, would have left the present government of Prime Minister Alexis Tsipras with no option but to resign. New elections would then have to be held, and chances are the unaccountable politicians that had been responsible for Greece’s unsustainable debt would return to power. That would be tantamount to allowing the troika of the International Monetary Fund, the European Central Bank and the European Commission to run Greece.
Armed with a firm mandate from the Greek people to negotiate a new debt relief package, the Tsipras government is poised to ask for a cancellation of a significant portion of the public debt—on a principle of justice, that greedy bankers that lent imprudently to irresponsible borrowers must share in Greece’s debt burden. In this, the Greeks are simply acting in accordance with the tradition of ethical governance first articulated by Solon, the Athenian poet and lawmaker who lived in the 6th century BC.
Of this great statesman, Victor Ehrenberg (“From Solon to Socrates”) wrote: “He bound the community as a whole to its laws, that is to say, he founded the state on justice. He made the people its executant, and secured the personal freedom as well as the political responsibility of every citizen…. He had a strong sense of the possible, and at the same time a deep feeling for that balance between freedom and responsibility, which was to be the principle in all further developments of the state.”
That description perfectly suits Yanis Varoufakis, the pugnacious but popular finance minister, who led the negotiations on Greece’s behalf until his recent resignation. Explaining why he could not accept the conditions stipulated by the proposed bailout, he said: “The end result of agreeing with the institutions on their unsustainable fiscal numbers is that Greece will, yet again, fail miserably to achieve the promised growth targets, with appalling effects on our people and on our capacity to repay our debts.” His parting words on the day he gave up his post were: “I’ll be damned if I will accept another package of economic policies that perpetuate this same crisis. This is not what I was elected for.”
Unfortunately, the story being peddled in Europe portrays Greece as an insatiable borrower that immorally used the loans to support a profligate lifestyle than to strengthen the country’s economy. It is a seductive moral tale, says Varoufakis, but a gross simplification of a complex reality. Referring to the system that bound the 19-member Eurozone monetary union, he said: “We built an asymmetrical union with rules that guaranteed the generation of unsustainable debt…. We are all responsible for it. Jointly. Collectively. As Europeans. And we are all responsible for fixing it. As Europeans. Without pointing fingers at one another. Without recriminations.”
The Greeks’ reasoned defiance of the gods of global finance somehow recalls the situation we found ourselves in after the collapse of the Marcos dictatorship in 1986. Marcos had left behind something like $25 billion in foreign debt obligations. One of the biggest chunks of this debt went to the Bataan Nuclear Power Plant, which was never operated.
I was part of the Freedom from Debt Coalition that was campaigning for the cancellation of the onerous debts incurred by the dictatorship and the rescheduling of payments so as to allow the steady recovery of the economy in the post-Marcos era. Like the Greeks today, we were keen to explore possible solutions beyond the stale orthodoxies offered by the IMF. But voices in the financial sector vigorously warned against the untold perils of a default. All debate ended when President Cory Aquino, probably the world’s most popular head of state at that point, spoke before a joint session of the US Congress, stating that we would honor all our debts. America responded by giving us $200 million in assistance.
The Greeks are showing the rest of the indebted world what it means to stand up instead, and speak truth to money.
* * *