In Referendum, Greece Seeks Something It Had Lost: Sovereignty

Greece's controversial decision to put the European bail-out to a national vote is a rejection of European collective rule

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German Chancellor Angela Merkel speaks with Greek Prime Minister George Papandreou and French President Nicolas Sarkozy during a round table meeting at an EU summit in Brussels / AP

For the past decade or so, foreign policy theorists and columnists have been telling us the era of the nation-state is over; national sovereignty is already eroding, and will only become less relevant. Borders are permeable, citizens and corporations are global, and supranationalism -- think structures like the European Union, United Nations, and World Trade Organization -- abounds.

Yet as European leaders and stunned markets found out on Monday, national sovereignty is alive and well in Greece. Monday morning, Prime Minister Papandreou announced a move that puts Europe's hard-won plan to bail out Greece's at risk. Instead of saying "thank you," the Greek people are now going to vote on whether or not they actually want the bail-out, which comes with strings attached. The other European countries who are putting their own financial security on the line to bail out Greece and other troubled nations are, unsurprisingly, astounded.

As the Wall Street Journal's Terence Roth puts it in a great explainer on the surprise development, "Referendums are anathema in [EU capital city] Brussels, where scripted summits and handed-down directives are more the style than popular votes and their messy democratic outcomes."

Referenda have plagued the European supranational structure for years. In 2000, a referendum in Denmark rejected the euro. In 2001, Ireland held a referendum on approving a treaty to reform the European Union, which failed with a shockingly low turnout (the treaty was later approved).* A new EU constitution -- "three years in the making," the BBC reminds us -- was scuttled in 2005 after failing to win referenda in France and the Netherlands. More recently, Ireland failed to ratify the Lisbon Treaty in 2008. After some modifications, it passed on the second go-round.

If the nation-state is fading, how are such obvious exercises of popular -- and popular national -- sovereignty as these referenda still bringing integration projects, and even rescue projects, to a halt? Of course, proponents of the end-of-nation-state theory might answer that there is bound to be some back-and-forth on the way to the future: sovereignty is the clear issue in supranational transitions, and while national sovereignty is well-established, we've yet to see a workable mode of supranational sovereignty emerge.

It's a debate we have even in the U.S., for example whenever binding international treaties on carbon emissions come up. It seems that Americans -- and particularly Americans in the government -- aren't too keen on giving enforcement rights to anyone other than the American government. It's also why the UN often has so much trouble with enforcement. It's fine when some international institution is making it easier for corporations to work across borders, or telling someone else to do something. It starts looking like less of a great idea when it's telling you to do something.

And that brings us back to Greece. As discussed in a previous post, the Greek fiscal situation was probably never really what it was supposed to be as a condition of joining the euro zone. Greece has always had a very low score on one of the crucial measures of sovereignty at the national level: the power to levy taxes. If you buy Michael Lewis's story in his new book Boomerang, taxes just aren't taken that seriously in Greece; fraud and evasion abounds. Papandreou came into power on a reform platform, but Greek citizens have been absolutely enraged by the sheer size of budget cuts during his tenure, often being pressed upon Greece by its European de facto bankers (Germany). Here, then, is Terence Roth's succinct summary of the rationale for the referendum:

Calls for new elections are rife, with the opposition parties pushing hard to topple Mr. Papandreou's government.

His solution was to call the bluff by offering what effectively is a vote on whether or not to stay in the euro. Polls show that while more than half of Greek voters hate the reform programs after four years of recession and mass layoffs, three out of four want to remain in the euro zone.

In a way, it's not surprising Papandreou resorted to this earlier method of establishing legitimacy and organizing populations. The standard refrain in the media is that the economic problems of the past few years have exposed the problems already present in a variety of institutions, not least the euro zone and the EU, which was always a little ungainly. Crisis can pull people together, but it can also highlight structural weakness.

There's another theory to float, though, and that is that economic troubles themselves are causing the backlash, or at least exacerbating backlash that always comes when new forms of social organization (supranationalism, for example) are being instituted. Harvard economist Benjamin Friedman has argued, for example in his Moral Consequences of Economic Growth, that increasing tolerance and inter-group cooperation is linked to economic expansion. When economic growth slows or stagnates -- or, worse, an economy actually contracts -- factionalism is pretty much guaranteed. Old solidarity lines reemerge, whether in increased attendance at religious ceremonies, upticks in racial violence, or simply greater relevance of identity politics. It's an idea that seems to be common sense, and certainly that's the way it's treated in practice: remember all the warnings against protectionism as we plunged into recession? Free trade tends to be off the agenda when unemployment is high. It's not surprising that supranationalism would be politically unpopular as well.

At the level of individual narrative, this Greek referendum still looks bonkers. Papandreou could have made himself even more vulnerable with this referendum idea -- certainly his party isn't pleased. Greece's financial situation is obviously now in even greater jeopardy. And the other European countries are, after all that work and pledges of money, understandably outraged. From certain more academic perspectives, though, perhaps even the out-of-fashion Durkheimian view of society as a independent, self-replicating organism, it makes a lot of sense. And either way, as a test case for those theories or just a potential trainwreck in slow motion, it's riveting.

* -- This article originally stated that a 2001 Irish referendum rejected joining the European Union. In fact, that referendum rejected the Treaty of Nice, which reformed the EU. Ireland has been a member since 1973. We regret the error.