An abandoned venue from the 2004 Athens Olympics. Source: Guardian.

Greece is on the brink of a financial disaster. Banks and the stock market are closed. Capital controls have been imposed. The country will hold a referendum on July 6th, which could decide whether Greeks keep the euro or go back to using drachmas.

There’s not been a shortage of analyses of Grexit. From adoration of its game theorist Finance Minister, Yanis Varoufakis; to this odd piece in the Journal that says “Greek Prime Minister Alexis Tsipras began leaning toward a risky referendum after creditors covered his proposed policies in red ink” (incidentally, marking papers in red can “damage students”). Barry Eichengreen blames the current crisis on political incompetence – on the part of both Greece and its eurozone creditors, with more blame on the latter. See here for a concise take on Greek fiscal history over the last four decades.

I hope folks at the EAC and UEMOA, the two entities most likely to realize monetary unions, are following the events in Greece closely. The big question on their minds should be: can there be a stable monetary union on the Continent without a fiscal and political union?

Lastly, regardless of how the next few days and the referendum play out, I hope Tsipras’ move will embolden leaders in the developing world to democratize their relationship with the IMF, the Bank, and other creditors. A reasonable democratic involvement in such matters would not just be an easy way to default and blame it on democracy. It would also incentivize creditors against lending money to governments like Greece’s. Obviously voters should not be allowed to decide whether or not they pay their debts (we know how that’d turn out), but they should be consulted before being saddled with crushing debt.