Euro, Greece and a referendum

Note kindly translated by Anne-Marie de Grazia

There is a lot of talk now about a possible referendum on Greece staying in the Eurozone. Even the German Minister of finances, M. Schäuble, has come out in favor of such a consultation. This sudden passion for referendums, coming ten years after the French referendum on the project of a constitutional treaty, is really touching. The very same people who have done everything in order to throw to the dogs the decision of the French people (don’t forget there had been 55% of « NOs ») suddenly discover in themselves a heartfelt fervor for referendums. If the fate of Greece and of democratic principles, ceaselessly trampled upon by the European Union, were not at stake, one could split one’s guts laughing. And tell all these newly-baked partisans of referendums, all these politicians coming with a broad smile to vent their newly found beliefs: “not you, you don’t say!” This is not to say that referendum question is not an issue. It certainly is. But, we must clarify all its implications.

An inapplicable option.

In reality, the option of a referendum on the exit from the Euro is inapplicable. In a text posted on a website of the American left, Stathis Kouvelakis says the following: “The time has come to make concrete the content, and explain the viability, of the alternative proposal, starting with the twofold initiative of a suspension of payments to the lenders and the nationalization of the banks and progressing, if necessary, to the choice of a national currency, approved by the public through a popular referendum.” [1]. Up to a point, this is also the position of Schäuble, a. o. But one must take into consideration two factors, which – in the case of Greece – render a recourse to the process of a referendum plainly inapplicable:

  1. A referendum requires a minimum of a campaign of 6 weeks (at the very least) and more probably of 12 weeks. But the mechanisms of currency speculation are triggered within the span of minutes, or hours. The temporality of elections, however desirable they may be, is simply not compatible with monetary speculation. This speculation will manifest itself with extreme force, unless one decides to close the Greek financial markets, not only the bond markets but also the stock markets. One will be faced with a case of extreme speculation, which cannot be reduced by merely applying the control of capitals. Financial markets will need to be closed. But, if the closing of all these markets is possible, this can be done only for a few days or else one is progressively changing the economic system. If Greece (or any other country) should keep all its financial markets closed for several weeks, one takes the risk of the economy changing its nature and investors deserting the country. The conclusion is obvious: it is not possible to hold a referendum without triggering massive speculation, and this speculation will not only be very destructive for the economy, it will imply that the government resort to modes of control going well beyond a mere control of capitals. But this would entail important political consequences, which would distort the very results of the referendum in question.
  2. A referendum makes sense only to the extent that it makes a democratic validation possible. A referendum taking place amidst unleashed speculation would not allow for the rules of democracy to be applied. One would find oneself far removed from the open debate which one is entitled to expect preceding a referendum, and which took place indeed in France, in the case of the two referendums of 1993 (Maastricht) and of 2005 (on the project of a constitutional treaty). Forthwith, deprived of a serene debate (however passionate it may be), a referendum is no longer a democratic process. The latter proceeds from the combination of debate (within the framework of a campaign) and of the vote. However, it is to be feared that during this campaign, which will by necessity be short, it is not ideas which will be expressed, but pressures which will be exerted, in the form – there you have it – of speculation. The political consequences of the latter will distort the debate and, as a consequence, vitiate the referendum process in its democratic nature itself.

One can see that such a referendum is not practicable, unless one considers that the referendum exists only in order to legitimate a decision, which has already been taken. But this argument of the impracticability of the referendum is not the only one, which can be raised. It is doubtful that, on such a question (should Greece, or another country, stay in or leave the Eurozone), a referendum is the best-adapted process.

The logic of referendum and government action.

Referendum processes are destined to bring back legitimacy into a democratic system by mobilizing a direct form of popular sovereignty. Referendums are then an irreplaceable instrument for the actual life of democratic systems. But popular sovereignty must be mobilized in order to decide on political questions, not on technical questions or on questions of society. Otherwise, a process of democratic legitimation will be transformed into a political instrument deeply dividing society and aiming in reality at introducing technical (or moral) norms into political space.

French as well as international traditions use the referendum as an instrument to decide on questions of sovereignty (such as independence) or treaties. Now, the Euro is in part a question of sovereignty, but it is also in part a technical question, liable to receive multiple answers. From this point of view, if the question of belonging or not to the European Union can perfectly well be decided by way of a referendum, it is doubtful that this can be the case in the question of the Euro. For, which question should be put to the citizens to answer? Should one ask “are you in favor or against the Euro,” or “are you in favor of the Euro at the price of reinforced austerity policies or are you against these policies,” or finally “are you in favor of a Euro assorted with a mechanism of solidarity and transfers among the member countries or are you against the Euro”? One cannot multiply the questions asked without emptying the referendum process of its very sense and spirit.

In fact, one must recognize the legitimacy of government action in treating problems that are very strongly contextualized. And we know that the context could change very swiftly the preferences hierarchy of any voters. The question confronting Greece (as it would any other country) in not just the question of the Euro in general but the Euro in the context of a logic of austerity and more precisely, the clash between the Eurogroup and the Greek government. We are here in a situation, which can be assimilated to a state of economic war, preventing the normal functioning of institutions within their normal framework. In this, the question becomes relevant to “exceptional decisions,” the ones which a government can take in the case of a state of exception, in which it can relieve itself temporarily from strictly respecting the wording of the law and of treatises, in order to assure the survival of the Nation and to find back to the normal course of events. From this point of view, one must recognize that the state of exception is characterized by the suspension of certain norms of legality in order to reconstitute the conditions of exercise of these same norms. The fact of taking measures said to be exceptional expresses the fact that the government is indeed sovereign.

It would be an error to abdicate government responsibility and to take refuge behind the arguments of a « democratic choice » (which would not be such anyway) by implementing a referendum process. The situation of Greece (but this could be applied to other countries) is one of economic urgency interrupting the normal course of rules and laws. In order to re-establish this normal course, which is the very essence of democracy, one can no longer act following the rules and laws, but must have recourse to measures of exception the finality of which will be to bring the situation back to normal. This, in the very spirit of true democracy, is specific to government action, and moreover to the action of a government recently elected in a perfectly democratic way, which is meant to be the government of the people, by the people and for the people. This government must now take on its responsibilities.

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Jacques Sapir

Ses travaux de chercheur se sont orientés dans trois dimensions, l’étude de l’économie russe et de la transition, l’analyse des crises financières et des recherches théoriques sur les institutions économiques et les interactions entre les comportements individuels. Il a poursuivi ses recherches à partir de 2000 sur les interactions entre les régimes de change, la structuration des systèmes financiers et les instabilités macroéconomiques. Depuis 2007 il s'est impliqué dans l’analyse de la crise financière actuelle, et en particulier dans la crise de la zone Euro.

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