THE people of Greece have presented the European Union (EU) with the greatest political crisis in its history after voters decisively rejected years of further austerity.
The Greeks overwhelmingly voted against their international creditor’s conditions for further bailout aid.
The final tally of the referendum was 61, 3 percent ‘No’ and 38, 7 percent ‘Yes’.
The Syriza-led government in Athens celebrated what it called a victory of democracy over economic ‘terrorism’.
The referendum, Greece’s first in more than four decades, came amid severe restrictions on financial transactions that included Greeks being restricted to a daily cash withdrawal maximum of 60 euros (US$67).
European officials had warned that a ‘No’ vote would mean exit from the euro, but Greece’s voters defied the EU.
On the streets of Athens, the mood was of celebratory defiance.
Thousands of people flooded into Syntagma Square, waving flags, blowing whistles and chanting.
“I feel joy and satisfaction,” said one of the voters waving a Greek flag.
“I do not care if I am hungry tomorrow or if we go bankrupt, I do not care.
“I have a kid who is sick and I might not be able to take care of, but I do not care, we are finding again our lost pride and dignity and that’s the most important thing.”
The Greek people have proven that they will not be blackmailed, terrorised or threatened.
Stunned European leaders called a summit for Tuesday (this week) to discuss their next move after the surprisingly strong victory by the ‘No’ camp defied opinion polls that had predicted a tight contest.
At the summit, the EU gave Greece up to Sunday to thrash out a deal to end crisis and prevent euro exit.
The bloc will not hear of Greece’s ‘No’ referendum.
Despite the ‘No’ vote, they continue to use opinion polls that show that ‘more than 70 percent’ of Greeks want to keep the euro.
Media houses such as the BBC and CNN brought in political and economic analysts who disputed the democracy in Greece’s ‘No’ referendum highlighting technical mistakes in the vote.
One of their arguments was why the ballot paper had a ‘NO’ on top and a ‘YES’ at the bottom?
Why not the other way round?
But the question is what is wrong with that way?
The EU is desperate.
A Greece exit (Grexit) from the eurozone will present the bloc with severe problems as this would give way to all the countries who want to leave to follow suit.
That will be the end of the bloc.
Greece’s Prime Minister, Alexis Tsipras in a television address described Sunday as a, “bright day in the history of Europe.”
“We proved even in the most difficult circumstances that democracy will not be blackmailed,” he said.
International Creditors’ demands include broadening the Value Added Tax (VAT) by 23 percent and this would include restaurants and catering.
There will be a reduced rate of 13 percent to cover a limited set of goods that includes energy, basic foods, hotels and water (excluding sewage).
There was also to be a super-reduced rate of six percent on pharmaceuticals, books, theatres, an increase on tax on insurance and the elimination of tax exemptions on certain islands and pension cuts.
The creditors’ proposals also suggested that corporation tax rise only from 26 percent to 28 percent while Greece wanted the rate set at 29 percent.
In return, Greece will be given a bail out of US$150 billion dollars to pay its US$267 billion debt.
Greece’s austerity measures remind one of Zimbabwe’s Economic Structural Adjustment Programme (ESAP) prescribed by the International Monetary Fund (IMF) in the 1990s.
During the ESAP period from about 1991, the buzzwords were currency devaluation and retrenchment.
Without these two, the programme would not achieve the desired outcome.
There would be no Foreign Direct Investment (FDI).
It was a period of austerity measures and belt tightening.
The programme saw cuts in government spending, trade liberalisation, deregulation of prices and devaluation of the exchange rate and removal of labour laws.
However, devaluation, removal of subsidies for basic foods and freezing of wages resulted in decline of living standards.
Average real earnings fell by close to 20 percent.
Instead of reducing debt and increase growth, between 1991 and 1997, economic growth averaged 2, 9 percent, well below the five percent rate in the 1980s.
Balance of payments became negative.
Rather than creating new jobs, under the structural adjustment programme thousands of workers were retrenched.
By the time ESAP was abandoned in the mid-1990s, Zimbabwe’s economy was crippled.
Still the refrain about currency devaluation continued.
Without foreigners we were nothing.
The consequences of the programmes are still being felt as they destroyed industries.
And today, two decades later, they say to access loans from the IMF again, the country has to implement the Staff Monitoring Programme (SMP), as the path to ultimate recovery and growth.
The SMP is an informal agreement between government and IMF staff, to monitor the implementation of the country’s economic programme.
However, the IMF-dictated policies arising from SMP will increase mass poverty and inequality by reducing the real incomes of the majority and inducing the povo to borrow money to survive, to pay school fees, medical aid shortfalls and local government rates.
I wonder if Zimbabwe was to go to referendum on the IMF’s SMP, what would be the outcome.
Certainly a deafening ‘No’.