What the Referendum Means for Greece

The news about Greece and its precarious financial situation has gripped the globe. There is a multidimensional matrix of positions, parameters and opinions arising from all the different working and interested parties. Clarity is essential ahead of the forthcoming referendum.

In a nutshell, a yes vote means willingness to work with Europe and to be amenable to cooperation; it is a positive call to seek help in a constructive way. This would in turn mean that tax rates must not be increased. Greek people see themselves as part of Europe. It is also true that the drachma will not bring the financial relief needed by Greece in a very short space of time. Yes the debt would be written off by the default, but market chaos would ensue whilst settling down to a new currency.

Greek goods and services would be exported and sold at the devalued rate of the new currency and imports would be subject to exchange controls. The result would be a difficult period of re-adjustment within Greece and somewhat Europe. This default would be like no other. For the country to become independent, the economy would have to restructure itself completely. The production levels for mined goods and other agricultural products will not be able to grow quickly, and services including tourism have a certain capacity and style, both sectors would need some time for any new investment to take effect for growth to be achieved.

The question remains who invests and who should invest in the Greek economy how and why.

The European partners of Greece are asking for certain reforms which would make Greece more competitive and more transparent and hence able to attract capital. Some other reforms like increasing the tax rate instead of reducing it -- perhaps to match the 10 percent of its neighbors -- may be punitive rather than productive and enlightened.

Some measures may be more effective than others and all should be evaluated. Does Europe see itself as ready and able to invest and co-manage with the host countries valuable infrastructure projects, and other essential governance activities, like the security of Europe and its borders, for the joint total benefit of the citizens of Europe, of investors, shareholders and the local population all becoming stakeholders, and engaged within common purpose?

This is the challenge Europe faces, and here it has an opportunity to rise to it. It is important to understand that Europe has looked kindly overall to the Greek predicament, and has been willing to help Greece. The key is to find the innovative path that will lead Greece out of the last century of politics into a more stable future. It is wrong to take the view that the correct process is divorce and to negotiate accordingly. There are segments of the population and the economy that are suffering and have suffered and they cannot be ignored.

Plans based on common sense of purpose and partnership in problem solving, are the basis for delivering the much needed change. There are many areas which should be subject to deep structural reform. The willingness has to be there from both sides to set priorities and tackle the change management systematically and with the full backing and support of the Greek population. Europe must not be so harsh, that any approach by the Greek people to establish a viable forward path will end in failure. Neither Greece should be so unyielding as to resist the necessary changes and next steps.

One thing is clear: Greece has not been able to manage its economy itself. Now Europe has to look within itself, to find excellence, those people, ideas, agreements, financing, projects and spirit of peace and conciliation that will lead to growth and stability for all.