Uncertainty surrounds legality of Greek referendum

Tsipras’s acceptance of latest bailout proposal a surprise on day of turmoil and confusion

Greek prime minister Alexis Tsirpas delivers a televised address to the nation from his office at Maximos Mansion on Wednesday. Photograph: Getty

Greek prime minister Alexis Tsirpas delivers a televised address to the nation from his office at Maximos Mansion on Wednesday. Photograph: Getty

 

Another day of turmoil unfolded in Brussels on Wednesday as the Greek public faced their third day of capital controls and persistent uncertainty over whether the referendum scheduled for next Sunday would actually take place.

By early morning it was evident that some form of negotiations were underway, despite Greece missing its IMF payment at midnight and failing to secure a last-minute bid to extend its second bailout on Tuesday evening.

Wednesday’s scheduled 11.30 am eurogroup conference call to consider the third bailout request was put back until 5.30 pm local time, in a sign that a possible deal was afoot. There was some expectation that finance minister Yanis Varoufakis could present a deal on the conference call.

But confirmation that prime minister Alexis Tsipras had written to lenders, agreeing to accept most of the terms of the latest bailout proposal on offer last weekend took most people by surprise.

Austerity demands

The letter received by the European Commission and which prompted a call between Juncker and Tsipras late on Tuesday night suggested that Greece was acceding to most of the austerity demands set out in the latest bailout proposal.

Apart from a request for Greek islands to remain outside the highest rate of tax, a longer implementation period for defence spending cuts and a delayed phasing-out of the top-up payment for poorer pensions, the Greek government was prepared to sign up to most of the fiscal adjustments demanded by the lenders in the latest proposals.

Unsurprisingly Mr Tsipras addressed the populace in a televised address early afternoon, denying he had capitulated.

Greece Crisis Coverage

Rumours that Tsipras would cancel the referendum – spurred by comments from his deputy prime minister on Tuesday and reports that Yanis Varoufakis had implied to the eurogroup that the ballot could be called off – proved unfounded. A defiant Mr Tsipras reiterated his call for a ‘No’ vote in Sunday’s referendum.

Tsipras’s speech was the crucial turning-point on Wednesday, ensuring that there would only be one outcome to Wednesday’s eurogroup teleconference. Even as Tsipras was speaking, the German Bundestag was debating the issue and ruling out any further bailout discussions until after the referendum.

Ahead of the eurogroup, its chairman Jeroen Dijsselbloem made his position clear. “We will talk about the proposals, but with that last speech I see little prospect of progress.”

As expected, euro zone finance ministers in the conference call decided only to consider the third bailout request after Sunday’s referendum.

The latest development now puts focus on Sunday’s ballot, despite continuing question-marks over its legality.

International standards

The head of the Council of Europe – Europe’s top human rights body – suggested that Sunday’s poll would not be in line with international standards if it goes ahead, noting that referendums should he held with at least two weeks’ notice, with international monitors observing the process and a clear question put to the people.

The fact that it is still unclear what exact austerity measures and exact programme the Greek population are being asked to consider also threatens to invalidate the standing of the referendum.

The paradox of the sitting prime minister requesting a new austerity-laden bailout package and then calling for a vote against that package is one of the many confusions hanging over the proposed referendum.

Both Alexis Tsipras and his finance minister Yanis Varoufakis intensified their efforts to encourage a ‘No’ vote on Wednesday, claiming that a ‘No’ vote would not signify a rupture with Europe, despite the opposite inference from senior EU figures over the past few days. This campaigning is likely to continue over the coming days.

Whether the last-minute bid by Tsipras to seek a deal on Wednesday was really a ploy to show the public that he had tried to negotiate with lenders right until the last minute despite knowing that he was never going to accept the deal, is anyone’s guess. Undoubtedly his handling of the process over the last few days have raised questions about his leadership.

The latest developments in the Greek crisis are taking place against a backdrop of immense economic uncertainty in Greece as the country heads closer to an exit from the euro and a massive default on its debts.

While the ECB decided to hold its fire on Wednesday on any immediate changes to its provision of emergency funding to Greek banks, further action from the central bank could be catastrophic.

The stakes in this crisis for Greece are huge. Whether Greek prime minister Alexis Tsipras will be able to stand over his conduct and argue that he has done the best for the Greek people in his handling of the chaotic negotiations will be the key to his political future.