After months of “acrimonious negotiations”, Alexis Tsipras, the Greek prime minster, called a referendum for this Sunday, asking the Greek people to vote on whether to accept the latest bailout conditions from the country’s creditors, says Matthew Campbell in The Sunday Times.
Exactly what they are voting on is unclear: the deal in question has been withdrawn by the European Union, and although the referendum itself doesn’t mention the euro, the EU has tried to frame it as a vote on whether to stick with the single currency or not. It may even be cancelled before it happens.
Regardless, the potential vote is “further polarising” Greek society, says Henry Foy in the FT – between the wealthy who see the euro as a symbol of prosperity and European identity (and who fear for their property and savings) and a working class that has seen “wages, job opportunities and state funding slashed”.
The IMF has a lot to answer for, says Ben Chu in The Independent. In 2010, when it was asked to participate in a financial rescue, Greece’s sovereign debt burden had already hit 133% of GDP. It should have been written down, with holders taking losses.
Instead, the IMF insisted Greece should pay off its liabilities in full, as a Greek write-off would set a bad example for similarly precarious European economies. Europe’s leaders were “also mindful” that German and French banks owned plenty of Greek sovereign debt.
The IMF also underestimated the impact of public-sector cuts on Greece. Instead of facing up to these “blunders”, it has “enabled a poisonous myth to take hold”: that the ungrateful Greeks have benefited from the generosity of their neighbours. In reality, most of the bailout cash went to external creditors and on recapitalising Greek banks.
Now that the IMF has been “jettisoned”, common sense should prevail, says Philip Aldrick in The Times. Greece’s creditors have a “commercial, moral and political interest in extending more debt on magnanimous terms”. Commercial because eurozone taxpayers have more than €300bn invested in the Greek government and its banks, and will lose “far less” under a voluntary restructuring.
Moral because Greece has suffered years of hardship and made genuine progress on reform. Political because a failure to support Greece would “undermine the ideological construct of the single currency”.
But hasn’t the crisis made it clear that the single currency is a failure? asks Jeremy Warner in The Daily Telegraph. Without banking and fiscal union, it is little more than a “glorified fixed-exchange-rate system”. All such arrangements are “ultimately doomed”. It is proving “extraordinarily difficult” to admit this, but until we do, Europe seems destined to “stagger from one economically debilitating crisis to the next”.