Sta Hungry Stay Foolish

Stay Hungry. Stay Foolish.

A blog by Leon Oudejans

Greek referendum

30 June 2015


Nearly everyone is complaining about the Greek referendum on Sunday 5 July 2015. Is it because it’s inconvenient or because it’s unfair? It’s definitely inconvenient to the Greek creditors. I sincerely doubt that anyone could argue that the referendum is unfair to the Greek people. I wish that we would have had a referendum about the continued increase of the European Union. It’s unfair NOT to consult voters on something this or that essential. Any outcome would however support the Greek PM whether it’s his (preferred) NO or an (expected?) YES. 

If the result would be a NO then the Greek still have two tracks: renegotiating with the EU and negotiating with others (e.g., Russia). Considering how the new Greek government has upset the Chinese regarding the expansion of the Chinese owned Piraeus container terminal, China is not a likely option anymore (Guardian). Moreover, the Chinese interest is of an economic nature. The Russian interest would be of a military nature and thus much more profound. See my June 6 blog.

If the referendum outcome would be a YES then the Greek government would be able to convince its own Syriza party and even some of its cabinet members that they should act as democrats in a country that invented democracy. Resignation of the Greek government might be honourable in the view of many but that will surely not happen. Once in power, it is very tempting to stay in power.

Nearly everyone is also complaining about the Greek stubbornness in the negotiations. Actually, they are very right in defending the Greek interests to the extreme. A compromise that doesn’t involve a debt write-off doesn’t make any sense. A comprise that doesn’t involve an expected future Greek budget surplus does neither. In fact, Greece has been a serial defaulter for over half of its existence since becoming an independent state in 1830 (Economist).

Unfortunately, the Greek negotiators do not seem to be the persons who will be suffering from the current Greek liquidity crisis. They may be communists but they appear to be well off in private (link, Paris Match, Guardian). In Dutch we have a saying for those people: their heart is on the left and their wallet on the right. It’s the people with their heart and wallet on their left, who will suffer from this.

The communist Syriza party should have been the right party to clean up the notorious Greek “chronic clientelism and corruption of the state” (FT). Unfortunately, early indications (FT) suggest otherwise. Perhaps not a surprise as Russian clientelism is also notorious. (OECD)

The Greek referendum is fair albeit not convenient to Brussels or the cash strapped Greek citizens. It still doesn’t bring any solution. The only solution is a debt for equity swap. Just like the the British sending the Royal Navy to seize marine assets in 1850 to pay off the country’s debts (Economist), the creditors should seize geo-political critical assets to prevent Russia from establishing a naval base on Greek territory. Also see my June 6 blog on the Bosporus and the Russian Black Sea Fleet.

An hour ago, I received a FT news flash that Greece has requested for a third bail-out. So far the Greek government had severely denied the need for a third bail-out despite Spanish claims that Greece would request for a 3rd one in the order of 30-50 billion Euro. Also see my June 15 blog.

For decades, Greece has been like a drug addict on Other People’s Money. Drug addicts need a “cold turkey” approach to remove the toxin from their system. Even after recovery, drug addicts will remain vulnerable to temptation. In essence, Greece needs to be put into external receivership to help clean up its act. That proposal would really call for a Greek referendum. This one is a no-brainer.


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