The Greek referendum brings democracy into the Euro crisis.

John Redwood MP supports the decision to let the Greek people vote on the latest deal to try to save the Euro and hopes the Greek people are more sensible than their government when it comes to voting.

Will the Greek people have the sense to leave the Eurozone?
Sir John Redwood MP
On 1 November 2011 15:25

The decision to let the Greek people vote on the latest deal to try to save the Euro is a wise one.

One of the biggest dangers of the deal was the lack of consent by the Greek people for the austerity measures that were a crucial part of it.

The Greek government was unlikely to get away with the tax rises, spending cuts and requirement for lower wages if it had just blundered on without asking the voters.

Inside the currency Greece needs big wage cuts. Outside, these matters can be disguised by devaluation.

Many proponents of the Euro will be worried. They will say Greece has no choice. They will be alarmed that Greece might vote No. They will dislike the uncertainty and delay which the referendum causes.

In reality, there was no ability to deliver their preferred policy without some means - like a referendum - of getting people to accept the chosen course of action. The Greek government and the Euro elite now have their chance to persuade the Greek people that staying in the Euro and accepting the cuts is their best way forward.

They might be able to do that.

If they cannot win a referendum, there are still two courses of action open to them. They can either improve the deal for Greece by finding more money to help them from elsewhere in the zone, or they can sort out their exit from the single currency.

Let us hope the Greek people are more sensible than their government.

Early opinion polls say they will vote down this scheme. Getting themselves out of the Euro would be the least damaging of the various unpleasant choices before them.

It will be interesting to see if the Euro elite have the power of persuasion to save their currency in Greece.

Meanwhile, of lesser importance, we will watch yet another Euro area government face major defeat. This currency scheme is a great way of getting rid of elected governments. It makes its popularity with those governments all the more surprising, as politicians usually want to survive in power.

The Labour and Lib Dem parties and Conservative Coalition Ministers argued last Monday that if the UK held an EU referendum now it would distract from the crucial Euro area process of sorting out their troubles, which should take priority.

Now that the Greeks themselves from within the Euro zone think a referendum is necessary, this UK argument looks less well based. 

I made enquiries of the Backbench Business Committee concerning the timing of the Petition debate on the EU, as one blogger said it would have been better to have it this week.

A representative of the Committee explained that last Thursday was the only date the government gave them for any debate, so they thought they had just better get on with it. Other worthwhile and popular debates remain in the queue.

The Rt Hon John Redwood MP is the Member of UK Parliament for Wokingham and the Chairman of the Conservative Economic Affairs Committee. His articles are cross-posted on his blog by agreement. 

blog comments powered by Disqus