Illustration: Liu Rui
Greece's decision to hold a referendum over the EU's rescue plan jolted the markets on Tuesday throughout Europe and the US, a signal that investors are worried over the country's fiscal future and the prospect of the euro.
The referendum, scheduled for next January, may not be hard to predict. Public polls suggest over half of Greece sees the second EU rescue package in a negative light.
The second rescue plan garnered some hope of saving the eurozone from the abysmal crisis. If the plan was voted down by the country's citizens, foreboding bankruptcy of Greece, it would deal an unfathomable blow to the eurozone.
The rescue plan and austerity policy may be difficult for the public to swallow. Greece has already staged the largest scale street protest over budget cuts. Rendering the decision of the country's fate to the public, which may concern their immediate life more than the country's long-term prospects, is only delaying the necessary choice.
A long-time welfare package, realized on government debt and not on productivity, has exhausted Greece's fiscal ability and triggered the euro crisis. The final solution is to cut government spending, extend work hours, and lower salaries and welfare standards.
But welfare has often turned out to be an explosive subject for elected officials. And even at this critical moment now, the government may still be wavering between the public's demand and the country's long-term future.
Greek Prime Minister George Papandreou, though initially expressed welcome to the EU's second rescue plan, later announced the decision for a referendum.
The hole is getting bigger. If the rescue decision had been made and taken a year ago, the loss would have only been one-fifth of what the amount is now.
At a time of economic difficulty, the government needs to demonstrate more determination to go against popular will.
Whether Greece can pull through the disaster will largely hinge on whether the government can confront public opposition, and not easily bend to violent street demonstrations, while sticking to its budget cut plans.