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Today has been a mighty day for democracy. The Prime Minister of Greece, George Papandreou, announced earlier that he will put the new bailout and debt write-down package to the Greek people in a referendum. Finally, the people of Greece are being allowed to have their say in their future. "The command of the Greek people will bind us," says Papandreou.

In recent months, the country has been surviving hand to mouth from EU bailout financing in order to prevent a default on sovereign debt that would send a shockwave across the other European economies. But the bailout funding has not been without strings attached. Representatives from the European Central Bank, the International Monetary Fund and the European Commission, who have come to be known as ‘the troika,’ have been making regular trips to Athens to evaluate and oversee the progress of austerity measures and public sector reforms designed to reduce the budget deficit but which so far have only plunged the country deep into recession. Athens and other major Greek cities have seen massive riots and demonstrations against austerity measures and most blame the current government for selling them out to overseas dictators. Without a referendum, a peace offering to the people, Papandreou will most probably be unable to avoid early elections.

The referendum will allow the Greek people to approve the latest deal proposed at the summit last week, details of which are still pending, but will provisionally be a new €100bn bailout loan and a 50% write-down of Greek government debt held by private creditors. The referendum may, in the end, boil down to whether or not Greece will remain inside the Euro or not. If they accept the bailout package, it will mean years of austerity and financial hardship. If they reject it, it will mean full default, chaos, and a serious reassessment of their European relationship. More importantly, it will allow Greece to regain some dignity and decide for herself what the next move shall be. 

Whatever the outcome, the fact that the government has finally realised it cannot go on ignoring the people, bodes well for democracy as a whole and greatly strengthens the case for referendums in other countries too. Let it be the first of many.