The most important 48 hours in EU history?

by Jerome Roos on June 28, 2011

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Amidst mass protests and an historic 48-hour strike, one ‘no’ vote by a Greek MP could tip Greece into bankruptcy and the world into global financial meltdown.

The eyes of the world are on Greece. Or, to be more specific, on Syntagma Square, where 300 MPs prepare for a crucial vote on the EU-IMF imposed austerity package — and where hundreds of thousands of Greeks will converge to stop the vote from being passed in the country’s first 48-hour strike since the fall of the dictatorship.

There is an uneasy tension in the air in Athens. Just yesterday, Communist protesters stormed the Acropolis and unfurled a giant banner calling for a massive organized counterattack. Today, over 5,000 policemen have mobilized in central Athens to prepare for an epic stand-off with hundreds of thousands of striking workers and indignants.

What is going on in Athens right now is truly historic. Indeed, superlatives aside, it is nearly impossible to describe the gravity of the situation at hand. What happens in the next 48 hours in Athens will determine the fate of the entire eurozone, the EU and — indeed — the world economy as a whole. This is the very climax of the eurocrisis.

Here’s the short synopsis: today, Greek members of parliament will start debating a new round of austerity measures, which are a condition for Greece to receive both the fifth tranche of last year’s bailout, worth €12bn, and a second bailout, worth €80-120bn from the EU and IMF. They will vote on the measures on Wednesday.

Now, if Parliament votes against, Greece will be denied both the fifth tranche of last year’s bailout and the second bailout by the EU and IMF. As a result, Greece will be forced to formally default by mid-July, when several billions of euros worth in three and six-month bonds mature.

In the midst all of this, hundreds of thousands of Greeks are expected to converge upon Syntagma Square, right in front of Parliament, for the largest mass demonstration so far — coinciding with the country’s first 48-hour strike since the fall of the dictatorship and the establishment of democracy in 1974. Unions have threatened to storm Parliament and physically prevent the vote from taking place.

As a result of the strike, the entire country will grind to a halt right as the austerity memorandum goes to vote on Wednesday. Indignant protesters will mount popular pressure on Parliament to possibly unsustainable levels, right when four Socialist MPs announced that they consider voting against the memorandum.

This leaves Prime Minister Papandreou’s Parliamentary majority hanging in the balance: if all four abovementioned Socialist MPs vote against, Papandreou will only have a majority of one. That means that if one more MP unexpectedly votes against the austerity package (or simply fails to show up for the vote), the measures won’t pass.

This, in turn, will almost certainly trigger a sovereign default, as the EU and IMF will withhold the disbursement of additional bailout funds. Rating agencies will call a ‘credit event’, causing the Greek banking sector to collapse. To understand how this could trigger an EU-wide financial meltdown, read the article here.

While the world holds its breath, some smart people are finally starting to realize that this is not just a Greek crisis. Even the Wall Street Journal now seems to recognize what we have been repeating endlessly on ROAR, namely that this is not a fiscal crisis in Greece, but a financial crisis in the European banking sector:

What we have come to call the Greek crisis is, first, an international banking crisis. Like Lehman Brothers, Greece is definitely not too big to fail. It is too interconnected to fail, too interconnected to the international banking system … What we are calling the Greek crisis is also a crisis of structural economic dysfunction.

Similarly, in an editorial yesterday, The Guardian wrote that:

Discussions of the Greek debacle commonly assume that it’s a disaster made in Greece that now requires the rest of Europe to step in and sort it out. Wrong: this is a crisis of the eurozone, in which Athens is not a leading actor but merely a stage set.

Only dimly aware of the structural problems in the eurozone and the looming insolvency of some of Europe’s largest banks, EU leaders met up with some of the continent’s richest and most powerful bankers last night. In the luxurious comfort of a Roman palace, they debated how the private sector could contribute to a ‘real’ solution for the crisis.

One of the options put on the table by the French was to roll over some debt, buying Greece more time to get out of this mess. But while the idea sounds appealing in theory, even the Financial Times has recognized that “you’d have to be dropping acid to think that [this approach] is even going to do its job of buying time for the next few years.”

As the German Green Joshka Fischer pointed out in an op-ed yesterday, this leaves us with only one realistic policy option: to prepare for a controlled default. But since Europe’s leaders seem unwilling and/or incapable of even considering this as a legitimate policy option, the people are going to have to drive this option home themselves.

Unfortunately for Greece and for Europe, the only way to demand a sane solution to this overwhelming crisis right now is through a full-blown revolt against the Greek political establishment and the foreign powers to which it has been so beholden. From Syntagma Square, we are hearing nothing less than a cry for revolution.

As Costas Douzinas just put it in The Guardian:

Syntagma has become Tahrir Square in slow motion. It is a peaceful, democratic revolt that was easier to start because the fear of brutal repression is smaller, but will be harder to complete as it faces the enormous might of the European Union and global finance capital.

Whatever the outcome, in the next 48 hours, the future of Greece, Europe and the world hangs in the balance. I will be on an airplane flying back to Europe for most of it, but hope to continue updating you as soon as I get back. Until then, strength and solidarity to our brothers and sisters in Athens!

{ 12 comments… read them below or add one }

GreekWarrior June 28, 2011 at 12:25

I was wondering wouldn’t a default, automatically mean an exit from the Eurozone and the return of the Drachma? (Because i would applaud that scenario!)



GreekWarrior June 28, 2011 at 12:25

And by the way great article!


Jérôme E. Roos June 28, 2011 at 12:38

Thanks :)


Jérôme E. Roos June 28, 2011 at 12:38

Not necessarily. You can default on your loans and still stay inside the eurozone — but you can’t do it the other way round. An exit from the eurozone will necessarily involve a default on your loans.


Mario June 28, 2011 at 13:57


greetz from Vienna !!!!!


Doug June 28, 2011 at 14:30

Now we see clearly the results of the Euro. 10 Years after they stuffed it in our pockets its standing on the verge of collapse. A really stupidly thought out and planned venture created by wealth and power hungry vultures who have nothing better to do then show their power. The crisis in Greece is the only logical conclusion to this action. The uncontrolled pricing policies brought on by the Euro have made it impossible for many to meet their daily financial responsibities. When we look at this on a government level, then it´s clear that the higher costs associated with the Euro and the European Union have an even greater impact. Funny though, thousands of people predicted something like this would happen before the Euro got in our hands. Naturally, these are only unknown poeple on the streets and not financial “Experts”, so nobody gives a damn what they think. How long are the governments going to keep paying millions upon millions for the advice of the finance “experts” who created and keep driving us further into this crisis?


Eurevolution June 28, 2011 at 15:50

(please delete previous comment)
Darnit Jerome ! you beat me to it… I was writing something similiar when I saw the twitter … lol Very well put article.

I still find it funny that people are afraid of a default, the default will actually let us recreate a better Europe because the MEPs like Von Rompuy, Barrosso and their little capitalist regime will have to make way for the people.

The only issue now is if we can stay together as a Europe without borders without the EURO. I for one am very happy to get rid of borders. We must not let nationalist ideals get ahead of us for this will only once again divide us. Let us get rid of the EURO but embrace Europe free of national divides. The governments have use nationality and race once too often, we should be wiser and not make the same mistakes.

Granted a crisis will make it hard for the majority of us but before the year is over, we will have rebuild a better world. Let history show that we did something and did not trade away our childrens future. This will be the Jasminespring and Europeansummer that generations to come will talk about.

The next fight is in Madrid tomorrow as the people host their own “State of a nation” assembly in SOL. One by one the cities are standing up to this manice called capitalist slavery!

Power to the people!


Clarissa Aubrey June 28, 2011 at 17:54

Another great article from you, Jerome. Thanks once again.


jeremy June 29, 2011 at 05:21

This is what I’ve been waiting for! Hopefully the Greeks will be strong enough to vote against! The collapse of the global market only hurts those with all of the money. The banksters, the IMF, the federal reserve, etc. Global financial collapse means tough times ahead, but it also means sovereignty! Real freedom from the slavery we all live under!
I’m not a religious person, but my prayers are with Greece.


Temtsel June 29, 2011 at 15:14

a national failure could be a success for a class, i.e. Greek working class


Selene June 29, 2011 at 15:29

Well,the parliament voted for the austerity package.More’s the pity.


ogloszenia londynek July 10, 2011 at 21:31

I love the efforts you have put in this, regards for all the great posts .


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