Papandreou to the EU: let my people vote

What a difference a week makes.

Last week, the European Union's leaders at long last exhaled after finalising a comprehensive deal to save Greece's bacon. And, to boot, saving France's major financial institutions (Société Générale and Crédit Agricole), which sadly have more direct exposure to the Hellenic Republic than other institutions, given their controlling interests in two of Greece's biggest banks.

Fast forward one week and who'd have thought?

If you believe the spin doctors at the G20 meeting in Cannes, the Greek Prime Minister Yorgos (call me George) Papandreou, pulled a swiftie and advised his host, French President Nicolas Sarkozy that the Greek people must approve the EU/IMF bailout package by way of a 4 December referendum. Sarkozy was speechless.

Perish the thought that the leader of the descendants of those fine folk who gave the world democracy actually wants to give his people the right to vote.

Going to the people is a no brainer.

Most Greeks are very unhappy with the strings attached to the largesse offered by their northern euro partners. Capitalising on this, Papandreou's Socialist POSOK party's chief rival, the New Democracy Party is steadfastly against being force fed any harsh medicine prescribed by the EU.

Papandreou seems to be piloting a sinking ship. One of his own party's MPs has already resigned, cutting the Parliamentary majority to just two. Then on Thursday two more, Eva Kaili and Elena Panariti announced will not vote with Papandreou, leaving Papandreou with no majority. A maximum of 150 votes in the 300-seat house. Six others from his own party are baying for his resignation. And on the same day, Finance Minister Evangelos Venizelos condemned the referendum proposal.

On the other side of Parliament, the New Democrats, who make up the conservative opposition, have demanded an early general election.

Its leader, Antonis Samaras, rejects any part of the stiff demands sought of Greece as a condition of accepting the bail out but – and, get this - insists on staying part of the eurozone. Go figure.

The panic that followed Papandreou's so-called impertinent appeal to the democratic will of his own people was deeply unsettling to both German Chancellor Angela Merkel and French President Nicolas Sarkozy. They thought they had a done deal. While an plea to his electorate must be seen in the context of other leaders in other times running roughshod over their voters, the response from Bruxelles was nothing short of a blatant denial of democracy.

The EU demands of trampling over the rights of Greeks to determine their own fate reminds me of Israeli Foreign Minister Shimon Peres who in 1993 under the aegis of the Norwegians, connived with Palestinian representative Mahmoud Abbas on an agreement to solve the ongoing Middle East headache. This was called the Oslo Accords.

Israel's Labour Party, (like the EU in this case) well aware of what the public would say if it went to a referendum, instead took it to the floor of the Knesset on 23 September 1993 where after only two short days of discussion the game changing approach to Middle East peace, scraped a mere 61 votes from a legislature of 120.

It is a fact that a key reason why citizens in Israel and the Palestinian Liberation Organisation (now rebadged as the Palestinian National Authority) are untrusting of their leaders is primarily because such a potentially calamitous change in architecture of Middle East politics was presented to them as a fait accompli. No consultation with the workingmen and women. No referendum. Nothing.

Were the Israelis and Palestinians leaned on by external powers to agree with each other and not consult with their electorates? Who knows? And if not, then clearly both Israel's Labour party and Mr Abbas' leadership acted with wilful deceit of their respective people. The legacy of which still pollutes any meaningful peace process.

Prime Minister Papandreou surely learnt the lessons of the Levant.

Papandreou's decision could on the other hand be just a negotiating ploy to wrangle more money out of the EU. Recognising that Brussels is petrified of a Greek default, which could bring about the collapse of the entire eurozone, he could now be milking popular anger in Greece at the imposition of austerity measures to win an ever-bigger bail out.

Or maybe Papandreou knows that he is caught between saganaki and crusty bread and wants to rest the responsibility for change on the heads of his citizens.

If he manages to last long enough to hold the referendum, he will be a winner or sorts. Regardless of the result. At least he cannot be branded as a stooge for Berlin, Paris, Bruxelles or Washington.

The EU insists that the Greek parliamentary vote on the bail-out must precede a referendum. Thereby neutering the point of the referendum.

The referendum will decide if Greeks want to live with the consequences or accepting or rejecting the EU lifeline.

If Hellenes give the bailout a resounding raspberry, then a default will follow. And soon after the Drachma will rise again.

Greece will peg the Drachma as a fraction of the Euro; slowly unwind its obese public sector; slowly deflate wages; lift the retirement age above the current 49; clamp down on entitlements and privatise a few key state assets. Oh and paying annual income tax will become a fact of life, unlike now where it's whole lot of fiction.

The referendum may be the starting point of a gradual orderly exit from the euro.

Staying within the eurozone but having Greece's economy planned by some boffins in Bruxelles and financed by bankers in Berlin will lead many Greeks to conclude that being a democracy is impossible while they remain members of the eurozone.

In short order if not already it will dawn on the Greek people that the price of freedom is an exit from the euro.