Germany Allows Greece A Referendum; Not That It Will Help At All

Various people in the German government have said that perhaps it might be a good idea for there to be a referendum in Greece upon how to solve the current debt crisis. Perhaps the population, rather than Syriza, might like to pronounce upon the various red lines. Would they prefer to stay in the euro even if it meant paying off all of the debt over time, that sort of thing. There's three points to make about this. The first being that it really should have happened some years ago but Germany, among others, blocked it. The second is that it would be very difficult indeed to compose the actual question. And the third that it wouldn'at actually help: there's not enough time.

The news itself:

Speaking ahead of a meeting of eurozone finance ministers in Brussels, Germany’s Wolfgang Schaeuble said a plebiscite on Greece’s euro membership could prove to be “helpful” for the debt-stricken country and its creditors.

"If the Greek government thinks it must hold a referendum, then let it hold a referendum," said Mr Schaeuble.

"That might even be a helpful measure for the Greek people to decide whether it is ready to accept what is necessary, or whether it wants something different."

The correct time to have done this, as with the correct time to have declared a proper default, was four years ago. But back then the then Prime Minister of Greece suggested exactly that course. And was told by Germany and France that if such a popular vote was held (and whatever the result, the threat was against knowing the vox populi) then all financial support would be withdrawn. As Greece was at the time running a vast public sector deficit that was a threat that couldn't be tested.

On the second point, what exactly would be the question? That the Greeks want to stay in the euro? That's a question that would likely receive a strong yes. But that's not really a solution because we all know that most Greeks would like to stay in the euro. The question really at issue is more subtle. Are they willing to bear the economic changes which are necessary for the country to gain the credit it needs to stay in the euro? And it's near impossible to see how that can be parceled up into a single Yes/No referendum question.

Finally, it's not actually going to work anyway:

Athens has however warned that it will not be able to fulfil obligations to its public sector workers without a fresh injection of bail-out money later this month. Greece’s next crunch date comes on June 5 when it faces a €300m IMF repayment.

The prospect of a referendum would however put a brake on the disbursement of creditor money as it would delay the implementation of reforms, warned Jeroen Dijsselbloem, president of the eurogroup.

Greece needs that last tranche of the current bailout ahead of any possible timescale for organising and holding a referendum.

So, a referendum on Greece and the debt deal? On staying in the euro? Nice ideas but not going to solve the current problems. Perhaps if only this had all been done that four years ago. But then the IMF should have organised the orderly default that four years ago as well.