Yesterday, Greek Finance Minister Evangelos Venizelos expressed the core decision about the future of Greece now facing Greek citizens: “Do Greeks want to remain in Europe, in the eurozone with the euro in a country that belongs to the developed world, or do they want to return to the 1960s? Do they think it is good to owe €100bn to the banks, or do they not think it’s good to live with such debt? Each citizen will make their own decision, with responsibility, in a process that’ll give a national sense of relief and recovery.”

Following reports Monday that many Greeks planned to not pay their electricity bills following the imposition of a property tax collected via electric companies, and the cratering approval ratings of the ruling PASOK party in Greece, Prime Minister Papandreou decided yesterday to hold a national referendum on a plan that was recently forged by European leaders to save the eurozone (although the fate of the referendum has become much more uncertain since this morning).

Greek opposition leaders believe that this recent move is a cynical ploy to stave off the ruling party’s – PASOK’s – eventual defeat in parliamentary elections. Outside observers, and debt-holders, view the move with intense anxiety and trepidation; a rejection of the European plan means further Euro instability, a sharp decline in confidence, and of course, a diminishing chance that anyone will get all their money back (as MF Global recently discovered).

It’s not often that I see a fairly direct accountability tool, the referendum, assailed by so many ostensibly pro-democratic critics.

Given the circumstances, how do Europeans hope the Greeks will vote? With a heavy heart and utmost concern for the future of Europe, Greece would vote yes, and delay the inevitable just a bit longer.
How will the Greeks likely vote? With a resounding hell no!

The Greeks seem to have realized that the people who are most hurt by economic downturns are those of lower and middle incomes, for purely structural reasons. These are the people for whom taxes are the most regressive, and cuts in social services are the most dire. This basic economic consequence of austerity is one that is only now being realized by Americans and the British. However, the Greeks have had far longer to internalize this fact.

They also likely realize that there is a mismatch between incentives and disincentives in modern society. Sure, many Greeks from all levels of income reneged on taxes. They also enjoyed a level of social services, job protection, and other labor protections beyond those in – let’s say – Germany. But are all Greeks responsible for the current situation in Greece? Not at all! The upper echelons of Greek society and Europe spent years reaping much of the benefits while socializing all of the inevitable costs. These problems are not cured by austerity at all. Rather, austerity accelerates underlying power disparities among social classes.

I also think it’s important to view Greece as a remnant of the former Ottoman Empire and a constituent nation of the Balkans, and not as a Western European nation in the same way we view France, Germany, Belgium, etc.

The romantic view of Greece as the eternal fount of western civilization is one of the myths that led Greece to unwisely join the eurozone, and other eurozone countries to cheer its entry despite clear economic indications that it wasn’t ready. On corruption (according to Transparency International in 2009), Greece ranks 71st, tied with Bulgaria, Macedonia, and Romania, and just behind Georgia, Ghana, and Montenegro. Modern Greece, founded in 1948 after resisting a post-WWII Communist take over, has fairly weak institutions, and is often prone to single-party, personality-driven dynasties. These are core Greek structural problems that Greece would better resolve with its own currency than while chained to the European Central Bank.

And it is for this reason that it is likely Greeks will seek to reassert its own sovereignty, in a way that may or may not be gently guided by PASOK and the referendum.

The best option for Greece is to default, reintroduce the drachma, and in effect, reassert its national sovereignty – provided that its government doesn’t devolve into indefinite political turmoil.