To recall Churchill’s words about the end of the beginning would, however, be apt. The gloves are off, negotiations are ended. The Greek government has rejected what it considers are unreasonable terms and has decided to take the issue to the people. Its banks are shut and tomorrow it will default. Many would imagine that is that. But as we have come to discover, in Euroland nothing is ever as it seems, nor like some everlasting soap, is anything ever over.
Whether they realize it or not the various authorities with whom Greece has been negotiating left the Tsipras government no option. It was elected on a mandate to end austerity and if it cannot it is right and proper in a democracy, to put the issue to the people. The Greek government has done the right thing. It plans to campaign for a No vote and its political position leaves no other coherent course open to it. Yet it may not win. Now cut off from such money as they still have and facing the possibility of a drachma of uncertain value, the majority may decide that while austerity is one thing, national bankruptcy is quite another. Unfortunately their government has not yet come forward with its plan B, which must explain what happens next if they do as asked and vote No.
As Alex Salmond discovered when he tried to waffle through a currency union between an independent Scotland and the rest of the UK which most said would not work, sufficient numbers of Scots put their money before his ambitions for their future, and he lost the referendum. Anything less than a workable plan to make a fresh start will risk such an outcome for Tsipras. His problem will be that a new drachma would be worth a good deal less than even the currently devaluing euro. Paradoxically Greece urgently needs a devaluation to re-boot its economy.
This then raises once again the muddle which is the foundation of what is fast becoming a cursed currency which threatens the very cohesion of the EU. Not only does the currency not have a government or a treasury, but it is founded on the unsustainable notion that once in it you can never leave. This is fundamentally as absurd as saying that once you get on a train you can never get off. So even if Greece were to go drachma, officially the euro would still be legal tender. This is all uncharted territory because no previous currency has ever been constituted on this basis, for the very reason that such a basis is unworkable.
But whatever the economic implications for the euro and Europe generally of what amounts to a financial war, they are as nothing to the political damage done to the whole EU project. Because the masses have been turned off Europe by undemocratic authorities using financial power to batter a weak state in dire trouble to fall into line and march in a direction its people do not want to go.They are gripped by record levels of unemployment and a flatlining economy. This is the power of capital over labour, of the rich against the poor of an unnerving aspect which, if you think about it, becomes chilling. It demonstrates a detachment by the financial and ruling class from the people they are supposed to represent and upon whom they finally depend. It stretches democracy so thinly that its meaning is lost; demonstrated by the fact that the European parliament has no voice at all in this drama and if it has any views the media do not even bother to report them, because they know they count for nothing.
Greece is bust, but whether it goes bust is in the air. Its economy needs a reboot but whether it will get one is uncertain. What is certain is that the euro is more troubled than ever in its short history and the EU, so recently a rock of timeless durability, is now riven with ominous fissures. The chances have significantly increased of the UK voting to leave. For the EU an even worse prospect is at hand. It will strengthen the campaign for the French right winger Marine Le Pen in her bid to become President on a manifesto to lead France out as well.