The False Dilemma of Alexis Tsipras' Referendum

06/30/2015 02:51 pm ET | Updated Jun 30, 2016

For five months, the left-wing "Syriza" Greek government, along with its right-wing partner, "ANEL," or "Independent Greeks," has shuttled back and forth to Brussels without, despite repeated attestations to this end, putting forth any concrete proposals for the fiscal consolidation of the country. Regardless, the Greek people believed in their prime minister, Alexis Tsipras, thinking he had the courage and stature to converse with his European partners on an equal footing and believing he was, indeed, in the throes of negotiating an agreement that would bring less austerity than previous memoranda.

As time went by, the hourglass emptied, with the government wasting precious time on meaningless issues such as its insistence on changing the name of its lenders (from "troika" to "institutions") and on selling the merits of its, albeit very low, negotiating prowess inside Greece. In fact, rumors abound that the finance minister and lead negotiator, Yanis Varoufakis, had received advice from an American law firm to keep negotiations ongoing until the final moments leading up to a Greek default in order to coerce a more favorable deal.

Looking back at the five months that preceded last Friday night's shock referendum call, it is evident that the government made numerous grave negotiating mistakes:
1) in February, it accepted an extension of the current memorandum without simultaneously receiving a disbursement of 7.5 billion euros, a sum which had already been secured by the previous government;
2) believing it was buying time, the government drained its reserves to meet monthly obligations to the IMF when it could have pressured negotiations from the outset by delaying these instalments;
3) it created concern and mistrust among its European partners, as Prime Minister Tsipras was seen speaking one language during negotiations and a totally different one when addressing the Greek people;

Thus, Alexis Tsipras found himself in an untenable position during last week's Eurogroup, forced to put forth an extremely harsh offer comprising 8 billion euros of measures, with 98 percent of them coming from increased taxes on a long-suffering nation.

Sensing it had the upper hand, the reaction of the IMF was immediate, prodding the Europeans to introduce a counter-offer with even more absurd demands, hitting not only the public sector and pensioners, but the only profitable industry in the country, tourism, by insisting on a 10 percent hike in the value-added-tax on hotels and restaurants and bringing their competitiveness into question.

Alexis Tsipras, who spent umpteen days in Brussels promoting his negotiating tactics rather than hammering out a beneficial agreement containing provisions for development and debt relief, returned to Athens and threw out the "referendum card," shocking his European partners and the financial markets.

More disturbingly, in order to improve his chances for success, he has asked the electorate to give its opinion on a proposal that he knew full well was not the final one. For, even though his claims are to the contrary, Tsipras knew that negotiations were continuing and, as Jean-Claude Juncker, the President of the European Commission, stipulated, a better deal was in the offing for Greece.

As such, not only is the referendum addressing an incomplete proposal, it is not even known if it is still on the table, as the institutions have been quick to point out.

Over the last five years, the Greek people have been faced with savage wage cuts, devastating tax increases and plummeting living standards. Now, with their banks shuttered and their country bereft of what dignity remained, they are called upon to suddenly decide their fate and, this, without having any indication as to what a "yes" or "no" really means and in response to a meaningless question.

They can not even find solace in their Prime Minister who has been dishonest from the outset and who, even at this crucial moment, refuses to come clean, insisting that this plebiscite has nothing to do with Greece's future in Europe and the eurozone, but, rather, about some non-existent proposal.

The situation is tragic, the country irresponsibly and needlessly divided and tormented by anti-European and pro-European rhetoric. Alexis Tsipras, the leader of the radical left, with the support of Panos Kammenos of the hard right along with the fascist "Golden Dawn," is, without any authority, leading the country into bankruptcy and a possible exit from the eurozone with unforeseeable consequences for its future.

And, to make matters worse, this is happening right at the beginning of the all important tourist season, sending nervous tourists to rethink their plans and dealing a heavy blow to Greece's predominant industry.

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