`Confusion, Controversy as Referendum Nears - Olive Oil Times

Confusion, Controversy as Referendum Nears

Jul. 3, 2015
Lisa Radinovsky

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Since a report on the Greek polit­i­cal and eco­nomic sit­u­a­tion last Friday, sev­eral of Greeks’ fears have been real­ized: there was no agree­ment between the coun­try and its cred­i­tors, Greece failed to make a loan pay­ment to the International Monetary Fund (IMF) which was due June 30, the European Central Bank (ECB) stopped prop­ping up Greek banks, and as a result cap­i­tal con­trols were intro­duced through­out Greece. Most sur­pris­ingly, very early on the morn­ing of June 27, Prime Minister Alexis Tsipras announced a ref­er­en­dum for July 5 in which Greeks will vote on whether or not to accept the cred­i­tors’ June 25 pro­posal of loans in exchange for addi­tional aus­ter­ity and reforms. However, since the bailout agree­ment expired June 30, Greeks will vote on a pro­posal many European lead­ers say is no longer on the table.

The coali­tion gov­ern­ment of the left-wing SYRIZA party and the right-wing nation­al­ist ANEL party calls for a No vote as a rejec­tion of pun­ish­ing aus­ter­ity that has not improved the country’s sit­u­a­tion, claim­ing that a No would improve its nego­ti­at­ing posi­tion in rela­tion to cred­i­tors, offer­ing hope rather than addi­tional aus­ter­ity, while assert­ing Greeks’ demo­c­ra­tic right to decide their fate. Those who call for a Yes vote (includ­ing the cen­trist Greek oppo­si­tion and most European lead­ers) claim that it is nec­es­sary to agree to work with cred­i­tors in order to keep Greece in the Eurozone, argu­ing that a No vote would not improve Greece’s bar­gain­ing posi­tion, but would likely lead to a return to the drachma and cre­ate even worse eco­nomic hard­ship in Greece.

The coun­try is sharply divided, with recent polls leav­ing the out­come uncer­tain. The sup­port­ers of a No, or Ohi, vote echo calls for the patri­otic pride and self-deter­mi­na­tion that is cel­e­brated on Ohi Day each October in a recog­ni­tion of Prime Minister Ioannis Metaxas’s refusal to per­mit Mussolini’s troops free pas­sage through Greece dur­ing World War II — a refusal that ini­ti­ated a period of strong resis­tance to fas­cism, and then severe suf­fer­ing in the nation.

Greeks stock up on essentials in advance of the Sunday referendum

During last week’s talks, nego­tia­tors reported progress, but meet­ings were abruptly halted after the prime minister’s unex­pected announce­ment. Lines imme­di­ately formed at cash machines through­out Greece, some of which ran out of money in the mid­dle of the night. Since then, the lines have con­tin­ued, except when ATMs run out of cash. Before the impo­si­tion of cap­i­tal con­trols on Monday, which include a with­drawal limit of €60 per account per day and restric­tions on trans­fers of money out­side of Greece, Greeks attempted to with­draw as much cash as they could try­ing to stock up on essen­tials.

Since Monday, Greeks have sim­ply been try­ing to get enough money to carry on. Visitors to Greece should note that with­drawal lim­its do not apply to for­eign account hold­ers, who are free to with­draw what­ever their bank allows, pro­vided they can find an ATM with suf­fi­cient cash.


The European Commission (EC) offered Greece another reform-for-loans pro­posal last Sunday. On Tuesday, the prime min­is­ter sent a let­ter to the lead­ers of the EC, the ECB, and the IMF stat­ing that Greece was pre­pared to accept that pro­posal, with some mod­i­fi­ca­tions, as part of an exten­sion of the expir­ing bailout pro­gram, and along with a new loan Greece also requested from the European Stability Mechanism that day. The requests were denied, with German Chancellor Angela Merkel and oth­ers say­ing nego­ti­a­tions can­not con­tinue until after the ref­er­en­dum.

On Wednesday, cer­tain banks opened to pro­vide pen­sion­ers with just €120 of their pen­sions. The Prime Minister urged Greeks to vote No on the ref­er­en­dum. A European finance min­is­ters’ meet­ing the same day ended with­out any agree­ment. On Thursday the IMF released a report that both implic­itly blamed the wors­en­ing state of Greece’s econ­omy on the cur­rent government’s poli­cies and explic­itly empha­sized that the coun­try will need debt relief and more loans in the com­ing years.

While Greece did not pay the €1.6 bil­lion due to the IMF on Tuesday, it was not tech­ni­cally in default since the IMF is not a pri­vate lender. The coun­try has also requested an exten­sion of its time to pay. However, Reuters reports that the chief exec­u­tive of the European Financial Stability Facility announced today that it reserved the right to demand early repay­ment of the 130.9 bil­lion euros Greece owes it, since the country’s fail­ure to make the pay­ment due to the IMF last Tuesday allows it to do so. Meanwhile, the head of the Hellenic Banking Association does not guar­an­tee that Greek banks will have liq­uid­ity after Monday morn­ing.

In Crete, short­ages are not yet vis­i­ble, since a lack of suf­fi­cient gaso­line ear­lier in the week was resolved. But accord­ing to Jeff Daniels of CNBC, bank clo­sures and polit­i­cal uncer­tain­ties have cre­ated prob­lems for many Greek farm­ers and exporters. Many com­pa­nies now insist on cash pay­ments, and with cash scarce, imported fer­til­iz­ers, pes­ti­cides, and fuel are likely to become dif­fi­cult to pro­cure. Still, one American importer said there had been no prob­lem with imports from Greece so far.

Nikos Michelakis, Scientific Advisor of SEDIK, the Association of Cretan Olive Municipalities, told Olive Oil Times that the ref­er­en­dum announce­ment and bank hol­i­day stopped bulk olive oil trans­ac­tions, both because pro­duc­ers pre­fer to hold onto their oil (con­sid­er­ing it a more sta­ble, valu­able cur­rency than any other now avail­able), and since olive oil traders do not have access to the cash needed to make pur­chases. However, bot­tled and branded olive oil exports abroad con­tinue as usual, and Michelakis expects Crete to pro­duce about 105,000 met­ric tons of olive oil this year.

Michelakis points out that Cretans tra­di­tion­ally viewed olive oil as a cur­rency as good as gold, a belief sup­ported by its con­tri­bu­tions to sur­vival dur­ing the famines of World War II.

Yiorgos Dimitriadis, the pro­ducer of Biolea, wrote in an email that many dif­fer­ent cur­ren­cies have come and gone in the 6,000-year life of olive oil,” while olive oil itself is value in its purest form,” able to replace cash, as it has sev­eral times. The Dimitriadis fam­ily here in Crete cre­ates such value by rais­ing the olive tree with our labor; we know that when the rains come, we shall go back and pick our olives one more time. Olive oil has bought gold, sil­ver, pre­cious stones, dol­lars and Euros time and time again.” Whatever the out­come, this cri­sis will not van­quish the olive groves.

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