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Too Democratic to Succeed: Greek Referendum Called Off

There was a lot of confusion coming out of Greece this morning when I wrote my initial post, and there’s still a lot of confusion, amid calls for resignation of the Greek Prime Minister, George Papandreou. But one thing has become clear: there will be no referendum on the debt deal.

Greek PM George Papandreou has said he is ready to drop a proposed referendum on the country’s eurozone bailout deal.

Mr Papandreou offered to hold talks with the opposition to seek consensus on the deal, adding that the referendum was never an end in itself.

Four ministers, including influential Finance Minister Evangelos Venizelos, opposed the referendum and there were calls for the prime minister to resign.

The reversal of Venizelos, along with the EU move to hold back bailout funds until the referendum, probably sealed it. But in addition, Papandreou, it appears, was forcing the opposition to come out in favor of the bailout, using the referendum as a stick. And this kind of worked. Now emergency talks have been called between the two parties, to arrive at some deal for a vote on the bailout or a unity government setup.

One of the possible outcomes is for Papandreou to step down, leading to a unity government until elections are called. Those elections could be a kind of referendum in itself, if any of the major parties come out against austerity during the campaign. But Papandreou has warned against early elections, saying that they would cause a Eurozone exit. And, since the opposition party now backs the bailout deal, there isn’t much hope of an actual choice for the people even if they get elections.

Stocks, of course, went up on the news that the Greek people will not get a say in the workings of their government. Because their views are so very inconvenient.

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David Dayen

David Dayen