One can imagine the shock that leaders felt when the Greek Prime Minister announced that he intended to have a referendum to let Greek voters decide on the austerity announcement. Here, an elite negotiated compromise, which itself was hard to agree on is being threatened by putting the deal to the voters (both because they might reject it and because Greece might run out of money first).
Many, including the Governor of the Bank of Canada, have supported the move to get public approval.
The depth of the problem and solution, make a referendum a powerful way for Greece to demonstrate its commitment to Europe and the policy pain they are being asked to endure. If they reject the compromise and turn away from Europe, one wonders if the European experiment will fail.
The alternative is probably getting out of the Euro
At the moment, the referendum looks like a vote of acceptance or rejection of the austerity package that will no doubt have a severe impact on the standard of living of Greek citizens.
Given the pain people will suffer, getting their buy-in through a vote is a good way to legitimize the policy direction, especially given the fractured and divided nature of political elites in Greece.
But what is the alternative to accepting the austerity measures? Surely, it is not a better deal. In fact, the referendum will effectively become a vote on the future of the Euro and Greeks participation in the Euro-zone. The question really needs to make this clear.
This is not just a problem for Greece?
The crisis may be centered in Greece but it is a bigger problem and the vote will have profound impacts on other members of the European Union (especially the Euro zone). While adopting a democratic course is commendable, the unspoken element of this is that citizens in other jurisdictions (who will also share the burden of the pain regardless of the direction Greece takes) do not get a say. This is especially important if the Greek voters reject the compromise and this has a cascade effect that destroys the Euro.
Given the urgency, there is another way
The referendum is an excellent tool for making long-term decisions about fundamental values and directions for a country. We expect these to be preceded by a lengthy and informed debate. In fact, the referenda that occurred to join the EU in many countries reflected this use of the tool. In the middle of a crisis (when emotions such as anger and fear may dominate), it is not clear that a referendum is the right course.
Representative public opinion polling can provide a very good idea of where Greek voters stand on all aspects of the choice — not just a make or break question. This should be the way forward combined with a real, sustained public dialogue about the future, which can include a discussion of the future of the Euro.