A master stroke for Papandreou to call a referendum on the austerity and rescue plan.  Of course there are contrasting views to this: The Greeks see an austerity package and the EU a rescue for the eurozone.  Beyond the obvious upheaval and unpredictability in international markets that this referendum has created, and barring any major revolt from the Greek political establishment (see vote of confidence) Papandreou has managed to write himself in the history books and escape the long shadow of his father.  I believe he holds a 90% chance to carry an affirmative referendum.

He has managed to squarely place Greeks in front of their real options.  He has provided a response to those that challenged the democratic institutions on the weekend of the 28th of October, he has wrong-footed his political adversaries and the opposition, he has provided the means to legitimise the enforcement of the forthcoming austerity and at the same time distance himself from failure if the Greek public (and crucially the political discourse in the media) fails to own-up.  His tactic entails a strategic masterstroke because (cf. Riker) he has changed the terms of reference of the debate and restructured the agenda.  Winning strategies imply eliminating the options of your adversaries and making their next steps predictable.  And there are not many options left to his political opponents or the nihilists on the streets of Greece.

It is obvious that the economic situation in Greece will get worse before getting any better.  The economic sentiment is negative and any positive messages (frail as they are) fail to convey a convincing message of hope for the future of the country.  The Greek leadership should have taken this opportunity to turn the tables and provide an example of positive thinking.  The mob needs to be enchanted with a positive message.  Papandreou is too patrician to convince the man on the street.  The most common slander he receives is that he is “thick”, which reflects the fact that he can neither enthuse nor entertain the crowds, as he lacks the skill of rhetoric manipulation.  But he definitely has political nous.  By placing Venizelos in the middle of the maelstrom he has eliminated any serious internal challenge from his party; by putting the Greeks in front of their real choices he challenged decades of populism; and by pulling a fast-one on the EU heavy-weights will either get toasted as a democratic icon across Europe or roasted as a euro deal-breaker by Merkel & Sarkozi.

PS 5/11/2011.  I am obviously on the minority among Greeks that see the referendum as a chance for catharsis.  Very few Greeks, it seems, trusted the collective will of their fellow citizens.  Sarkozi has made a big deal of bringing Greece in line and Papandreou to heel as the topic of the Greek referendum hijacked his G20 summit.  And then of course the Greek political elite woke-up to the fact that they had been out-maneuvered and collectively declared the end of times. The rumour now is that George was playing poker.  I believe he was sincere.

PS2 21/5/2012.  And a recent upheaval of indignation in the Greek press because Merkel reportedly suggested a referendum in Greece for whether they want to stay in the Euro!  George was ahead of his time.  🙂

And a very good article on The Economist.