In 2011, overwhelming opposition from Greece’s European partners forced Prime Minister George Papandreou to withdraw a proposal for a referendum seeking a “clear mandate” from voters to carry out European Union-backed policies. Last week, the opposite scenario unfolded: Germany suggested that the Greek government hold a plebiscite on whether to accept creditors’ demands for economic reforms or ultimately leave the euro zone. This time, however, it was Greece that demurred.
This role reversal reveals at least three consequential aspects of the changes, real and perceived, in the interactions between Greece and its European partners:
First, having achieved progress on containing and isolating the Greek crisis, Europe seems a lot less worried about the potential for negative spillover effects should the multiyear drama now end in tragedy.
Second, Europe is becoming less resistant to the notion of Greece exiting the single currency, especially if this were the result of a Greek decision rather than one imposed by its EU partners.
Third, the proposed referendum would push the Syriza-led government into a lose-lose situation.
To understand these three developments, it is worth recalling why Europe crushed the referendum proposed by the Greek government in 2011.
Confronted by pockets of internal opposition, Papandreou saw the referendum as a way to mobilize broad-based voter backing to implement difficult economic reforms. His European partners strongly opposed this idea for two reasons: concern that a Greek referendum would set the wrong example for other peripheral economies that were struggling to restore market confidence, including Ireland, Italy, Portugal and Spain; and concern that a bad referendum outcome would push Greece out of the euro zone while Europe still lacked the instruments and institutions to contain the collateral damage.
Almost four years later, Europe is far less worried about the adverse consequences of a Grexit.