‘Democracy is the tyranny of thousand fools’ says Commodus, a lead character and villain in the film – Gladiator. When Alexis Tsipras has left the decision on Eurozone- to leave or remain, to the people- the writing on the wall is very clear – that Greece will default and exit from Euro zone.
Referendum is going to be an expression of simple popular sentiments. Wise economic course of action will not be reached.
Through referendum, Tsipras has outsmarted everybody. The responsibility of the decision will remain with the people. Most importantly, the EU cannot blame about a decision taken by the people of Greece. The real winner and safe man will be Mr Tsipras.
Accepting the bailout plan proposed by the EU will be against the ideology of his left wing party. On the other, rejecting the bailout plan will put the responsibility of economic misery and exit from Euro zone on his shoulders. By shifting the decision making job to the people, Tsipras became a winner politically.
Already Greek public is thinking that their PM and the Syriza can think politically only. That will not solve their economic problems. Referendum is not a way; rather it’s only a deviation.
Now the lead question continues –reconstruction of the Greek economy. In the outcome of a default, how Greek banks can function properly? Who will give loans to Greece if it comes out of the Euro zone?
Mr Tsipras can manage a situation of banking sector anarchy if it happens in the immediate future? No referendum can give answers to these questions.
Europe insists the continuation of Greece in the currency union to defend the idea of a common currency.
More than the failure on the currency identity, a Greek exit will make some of the lenders to Greek banks in a difficult position. Even a small weakness in the Euro zone will send shock waves into the world economy. Definitely, a Greek default and euro exit will not be a good news for the world economy. A Greek default will be worse for Greece, bad for Euro zone and a shock for the world economy.