Wall Street Journal
November 3, 2011
So much for democracy. Less than 72 hours after Greek Prime Minister George Papandreou stunned the world with his plan for a referendum on Greece's debt deal, it was off the agenda. All it took was a commitment from the main opposition party to back the bailout plan. Suddenly, a deal so important the people had to be consulted became so important the people can't possibly be consulted until it has been fully implemented.
The U-turn was a relief to markets, removing the fear of imminent Greek bankruptcy; its official lenders had threatened to withhold payment of the next tranche of its bailout until after the referendum. Even so, this episode has profoundly changed the nature of the euro crisis, dramatically raising the stakes should the Oct. 27 deal fall short.
For the first time, the euro zone has acknowledged that a country could quit the euro. Germany's Angela Merkel and France's Nicolas Sarkozy told Mr. Papandreou that the terms of Greece's debt deal were nonnegotiable, so any referendum would be a vote on whether to remain in the euro. The German and French leaders said Greece was free to make this choice.
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