New York Times
Editorial
November 2, 2011
We are no fans of political referenda, with their simplistic yes or no answers to complicated policy questions. But we understand the dire circumstances that led Prime Minister George Papandreou of Greece to suddenly call for a national referendum in December or January on the terms of the latest European bailout plan.
As risky as the move is — for Greece, the European Union and the global recovery — Mr. Papandreou has decided he needs a mandate to press forward with the difficult reforms, and too onerous austerity, that is Europe’s price for keeping Greece solvent.
At this point, it is not even certain that his government will survive this week’s parliamentary vote of confidence. Athens has enough cash to pay its bills through mid-December. But, if that passes without a new agreement being finalized, it is hard to see how an extremely disruptive default can be avoided or contained. Italy’s lenders, in particular, will demand risk premiums higher than Italy can afford.
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