A few days ago, in the euro summit on June 22, all indications were that Europe's political beasts and IMF representatives were ready to accept the latest proposal of the leftist Greek government that would have broken the five-month deadlock between Greece and its lenders.

Indeed, the members of the Greek government negotiation team had submitted a list of proposals that were fully in line with the logic of the EU/IMF bailout programme for Greece: more austerity and additional structural adjustments.

All in all, the proposals they made amounted to over $8.9bn in additional cuts between 2015 and 2016.

The leftist Greek government even proposed a tax increase to incomes above $33,000, thus suggesting that individuals in that income bracket rank among the wealthy. Basic food items and services were to carry a 23 percent VAT.

Expert: Referendum plan a good idea

The special VAT rate on Greek islands, which is so crucial for the tourist sector of the economy, was to be removed. The early retirement age was to be increased as of the start of 2016 and a benefit for low-income pensioners was to be gradually substituted, beginning in 2018.

Obvious capitulation 

The obvious capitulation on the part of the Syriza-led government to Greece's lenders, which was not the first one, was made in order to get a deal done as time is rapidly running out for Greece.

The current bailout programme expires on June 30 and a payment to the tune of $1.8bn is also due to the IMF on that same day. Without a dime in its coffers, the Greek government knew that without an agreement, a default was inevitable and was fully aware of the fact that the dark clouds of a Grexit were spreading dangerously over Greece.  

But as it usually happens in situations of negotiations between ordinates and subordinates, master and slave, rich and poor, strong and weak, the more compromises the latter makes, the more compromises the former demands.

Without a dime in its coffers, the Greek government knew that without an agreement, a default was inevitable and was fully aware of the fact that the dark clouds of a Grexit were spreading dangerously over Greece.

 

As such, the Greek proposals were suddenly found to be inadequate by the lenders and there were demands on their part for more blood and tears.

Germany and the IMF wanted to force the Syriza-led government to cross its last and final "red line", which was over additional anti-social measures in the nation's social security and pension system.

So, in yet another Eurogroup meeting held on June 25, the Christine Lagarde/Wolfgang Schäuble duo (IMF chief and German finance minister) wanted the benefit for low-income pensioners to be completely eliminated by 2017.

If this proposal for overhauling the nation's pension system were to be accepted by the Greek government, it would mean that a person who today receives a monthly pension for the amount of, say, 500 euros ($560) - close to 50 percent of Greek pensioners receive pensions below the official poverty line - would be deprived of nearly 200 euros ($223).

Causing a stir

In addition, the lenders proposed a five-month extension of the current bailout programme, which would include $17bn in funding, most of it now earmarked for the recapitalisation of Greek banks.

The Greek government's proposals were already causing quite a stir back home among several Syriza members of parliament, who did not hesitate to announce in public that they would not vote for an agreement that not only maintained but reinforced austerity, so further capitulation to creditors' demands would be political suicide. 

Of course, that has been the aim of the euromasters and of the IMF all along - ie, finishing off the leftist government in Athens in order to send a message across to all potential "troublemakers" in the euro area of the fate awaiting them if they dared challenge the neoliberal, austerity-based orthodoxy of the new Rome.

But the Greek government did not take the bait. It refused the EU/IMF proposals, although they were only a bit more extreme than its own proposals, and, early on June 27, Greek Prime Minister Alexis Tsipras sent shockwaves through Europe by calling a surprise referendum for July 5 on the bailout deal.

But this is a sham referendum, with Tsipras trying to hold on to his job, as the bailout programme expires on June 30, which means that this is now a referendum on whether or not Greece should remain in the eurozone. 

A man sells napkins by an ATM that was emptied by people withdrawing cash, in Athens [REUTERS]

However, the national dialogue around this topic has been stifled all along, with Syriza's leadership also having aligned unequivocally on the side of the euro.

What if they vote 'yes'

Clearly, Greek public opinion doesn't have the necessary information to make a decision on such a crucial issue in such a short period of time.

And what if the majority were to vote 'yes', which is what will most likely happen. Would this mean, then, that the leftist Greek government would turn around and accept whatever bailout terms its lenders were to make?

Probably so, although the decent thing for them to do would be to resign on the spot.  

This is a sham referendum, with Tsipras trying to hold on to his job, as the bailout programme expires on June 30, which means that this is now a referendum on whether or not Greece should remain in the eurozone.

 

The call for referendum on the future of Greece in such a short period of time must be seen for what it really is: a tool of politics, a way for the leftist Greek government to take the pressure off its shoulders, a refusal to accept responsibility for having dragged the country into five months of never ending negotiations with its lenders with disastrous consequences for the economy.  

To be sure, in the days ahead, the Syriza-led government will attempt to justify its decision to call a referendum on the future of Greece in Europe as a reflection of its commitment to participatory democracy and in its belief in the ability of the Greek people to take charge of their own future.  

Yet, when former Prime Minister Georgios Papandreou's government sought to have a referendum on the bailout deal back in 2011, the current Greek prime minister charged that this was a decision which, if carried out, would cause the collapse of the nation's banking system and lead to an economic meltdown.      

But Greek politicians are accustomed to putting their own political interest ahead of the national interest - and the current government officials are no different in that regard.

Soon after the announcement of a referendum for July 5 was made, people were lining up at ATM machines outside banks to withdraw money - just like Tsipras had predicted would happen in the event the Papandreou government had held a referendum in 2011. 

Now the only thing that we must wait to find out is whether the next phase in the prediction made by Tsipras four years ago - an economic meltdown - also materialises.

C J Polychroniou is a political economist/political scientist who has taught and worked for many years in universities and research centres in Europe and the United States.

The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.

Source: Al Jazeera