Was Greece referendum call a daring game of brinkmanship?

Greek politics, an obscure affair more often than not, descended into turmoil today. Prime Minister George Papandreou faced further defections of lawmakers from his socialist PASOK party, cabinet ministers openly turning against him, and calls for his resignation from within his own party. Amid the chaos, though, some observers spotted the chance of a new start for Greece.

Mr. Papandreou’s controversial plan to hold a referendum on the latest international bailout for the debt-stricken Greek economy seemed to have backfired, earning him not only the anger of his European colleagues, but also costing him much of the support he had left in Greece’s political class and among voters. His own finance minister, Evangelos Venizelos, openly opposed the idea, saying that Greece’s membership in the eurozone was a historic achievement that should not be jeopardized by a referendum.

“The referendum is dead,” says George Kapopoulos, a political columnist in Athens. “It is out of the question to ask the Greek people to make a choice when one of the options is suicide.”

The suicide option is leaving the eurozone, which the majority of Greeks do not want. When Papandreou announced the referendum Monday evening, he did not specify what the exact question would be, but it was obviously meant to be a plebiscite on accepting the terms of the latest bailout package for Greece, agreed to on Oct. 27 at a summit in Brussels.

Surprised and angered by the plan, German Chancellor Angela Merkel and French President Nicolas Sarkozy on Wednesday evening summoned Papandreou to Cannes, where the G20 leaders were gathering, and told Papandreou that he would have to ask his people whether they would want to stay in the eurozone. They also announced the halt of all financial aid to Greece until after the referendum.

There is speculation that Papandreou was expecting, and indeed hoping for this reaction, says Sappho Xenakis, fellow at St. Anthony’s College in Oxford. “We can’t be sure, but it is possible that in a daring game of brinkmanship, Papandreou used the referendum to push the opposition party New Democracy but also critics within his own camp into a position of open support. Today in parliament, everyone came out saying, ‘Of course we want to stay in the eurozone.’ ”

When the Greek prime minister entered discussions with the opposition on Thursday evening, it was not quite clear if he had withdrawn his plan for a referendum. It was also unclear if a vote of confidence, planned for Friday morning, was still on the schedule. 

For Mr. Kapopoulos, that is of minor importance. “The task now is to agree on an interim government, probably led by a nonpartisan figure like former central banker Loukas Papademos. This government has to make sure that all conditions for the international bailout package are fulfilled, so that Greece gets the next tranche of credit as planned in December.”

If political opponents in Greece can agree on such a course, it will give the country a chance to regroup, have early elections in a few months, and stay in the euro, says Janis Emmanouilides, senior policy analyst at the European Policy Centre in Brussels. “Going back to the drachma would have catastrophic consequences for Greece: huge unemployment, high inflation, banks collapsing, public and private debt skyrocketing. Given these prospects, you wonder why politicians in Athens still quarrel.”

But, says Mr. Emmanouilides, for the first time it seems that Greeks truly believe that Europe could drop them. “It’s been a wakeup call, and there’s a chance they will draw the right conclusions.”