Greek Prime Minister George Papandreou on Monday called an unexpected referendum on a new EU bailout deal for his debt-ridden country, a move that could prompt snap elections if a public angry with austerity rejects the terms.
Below are comments by analysts and Greek policy makers.
COSTAS PANAGOPOULOS, POLLSTER, ALCO
“If the referendum answer is ‘no’, Papandreou has to resign.
“In the meantime, what will happen with the decisions the EU took last week? I cannot understand what the Prime Minister wants to do. It could be the only way he has to leave the government, to share responsibility.”
MIHALIS CHRYSOHOIDIS, GREEK DEVELOPMENT MINISTER
“(If the government loses the referendum) we will certainly hold elections”.
HOWARD WHEELDON, SENIOR STRATEGIST AT BGC PARTNERS, LONDON
“If there was to be a referendum, we may reasonably conclude that they may not accept the austerity measures. We may conclude that it will bring the pack of cards tumbling down.”
NIKOS ALIVIZATOS, CONSTITUTIONAL LAWYER, ATHENS
“It’s a political shock. Effectively, the government removes the burden of responsibility from its own shoulders, where it belongs.
“Holding the referendum in January would be disastrous. It’s totally absurd. All Europe would have to wait for Greece, Greece would be completely isolated.”
YANNIS MICHELAKIS, OPPOSITION NEW DEMOCRACY PARTY SPOKESMAN
“Mr. Papandreou is dangerous, he tosses Greece’s EU membership like a coin in the air.
“He cannot govern and instead of withdrawing honourably, he dynamites everything.”
KATHY LIEN, DIRECTOR CURRENCY RESEARCH AT GFT FOREX, NEW JERSEY
“The Greeks like to cause trouble and this should impact the euro and risk appetite. They could have taken the money but instead they decided to hold their first referendum since 1974, this being their second.
“This is going to bring back volatility and uncertainty in the market and essentially erase all the efforts made by the EU to make a deal. It should take a month or two for the referendum to occur but with 60 per cent against it getting this passed will be a challenge, if passed it will provide extreme relief but given the protests and opposition it will be very difficult. This only heightens uncertainty for the next one or two months.”
ALBERTO BERNAL, HEAD OF RESEARCH, BULLTICK CAPITAL MARKETS
“I think that if this goes to a referendum there is a very large chance that the referendum will endorse the austerity package. I would not expect it to fail because most of the population does understand there needs to be adjustment on spending if Greece wants to remain part of the euro zone.
“It’s a political call because Papandreou wants to have more support from the unions.
“Most of the population in Greece is pretty educated -- this is not Latin America in terms of education -- so this should actually help Papandreou. That is my sense. I would sincerely doubt that this referendum would not pass.”
DAVID LEA, CONTROL RISKS
“It’s all in the question. If he can frame it as a sufficiently apple-pie issue then he stands some chance of winning. ‘Do you want to deviate from the righteous path of austerity and emergency assistance, thereby causing us to default, live in abject penury and mockery for decades? Or not?’ should just about cover it.
“He’s been looking for some sort of external validation for his policy for months - either in the form of a unity pact with the opposition, or in the form of a referendum. He’s been publicly and embarrassingly rebuffed on the former, and his people have wondered aloud about the latter on several occasions. This time it looks like he’s doing it ... If he wins, it’s essentially a confidence vote, if he loses, it’s resignation with honour.
“My suspicion is that he’ll have got word from PASOK managers that a few more MPs were going to rebel at the next vote, if there was a next vote (as there surely will be). The summit agreement last week provoked a bit of ill-feeling in Greece over the associated loss of sovereignty -- and nationalism is still a powerful force in Greek politics on all sides.”
LUZ PADILLA, EMERGING MARKETS FIXED INCOME FUND PORTFOLIO MANAGER AT LOS ANGELES-BASED DOUBLELINE
“I don’t think this referendum is all that positive. I understand it from the Greek political perspective. The population is so against the measures already. The package that was put together was done to avoid a messy default and this almost seems to fly in the face of it. If it doesn’t pass, that is where you are going to be. Against all the efforts of the core Europeans, these guys in one fell swoop have swept aside the efforts to avoid a messy restructuring in one move.
“If it doesn’t pass then what?”
NOBEL PRIZE-WINNING ECONOMIST CHRISTOPHER PISSARIDES
“It is difficult to predict what will happen to Greece if they reject it. It will be bad enough for the European Union and the euro zone in particular, but it will be far worse for Greece.
“If he (Papandreou) doesn’t get this vote he will have to resign. I’m surprised (because) ... the biggest success he has had so far is that he managed to keep his party together -- that’s not very easy with Greek political parties at times of crisis -- and there was no doubt that the (euro) package would have been voted (through) in parliament.
“In the scenario of a ‘no vote’ Greece would declare bankruptcy immediately, they would default immediately, I can’t see them staying within the euro.”