In Europe: Greek PM faces survival vote, bailout in balance

4 November 2011


Papandreou dominates the European headlines once again. New Democracy spokesperson says “he is clinging to the steering wheel of a car that is heading over a cliff”

Prime Minister George Papandreou faces a knife-edge confidence vote on Friday, with the fate of both the nation’s EU/IMF bailout deal and the global economy in the balance.

After intense pressure from European leaders, the government confirmed it had dropped plans to hold a referendum on Greece’s euro zonemembership, which had threatened an immediate crisis in the bloc, but remained some way from saving the bailout deal.

Papandreou says he announced the referendum on Monday — sending shockwaves through world markets — to ensure political consensus for the deal. His opponents have since said they will back it conditionally but accuse him of clinging to power.

“He is clinging to the steering wheel of a car that is heading over a cliff,” Yannis Mihelakis, spokesman for the conservative New Democracy party, told Mega TV.

Opposition politicians want Papandreou’s resignation and early elections as a price for their support for the bailout deal — which aims not only to save Greece from bankruptcy but prevent its problems engulfing bigger euro zone economies.

For euro zone leaders — and Greece’s battle to avoid a debt default — the worst possible outcome would be a stalemate, prolonging the agony over the 130 billion bailout which euro zone leaders agreed only last week.

The omens for cooperation were not good in the hours before the vote, expected to be held late at night.

CONDITIONAL OFFER

On Thursday New Democracy leader Antonis Samaras dropped his opposition to the bailout, which is being pushed by Papandreou’s PASOK party, on condition that a short-lived coalition government is formed to take the country to polls.

That means the two main forces in Greek politics now back the deal, despite the new wave of austerity it demands — on top of budget and pension cuts and tax rises which have pushed the economy into recession and brought Greeks on to the streets in sometimes violent protests.

However, in the fractured world of Greek politics this does not ensure the package will win rapid parliamentary approval.

Samaras made Papandreou’s stepping down a condition for forming a coalition to quickly pass the bailout through parliament and cancel the referendum. Papandreou told parliament he was not tied to his post.

“Papandreou must get on a helicopter and leave the country,” said Marios Pomonas, 55, a lawyer. “He has disgraced the country but all he cares about is himself and his office.”

“Samaras is arrogant. Those two can’t work together,” he added, echoing many on the streets of Athens on Friday.

Through waves of austerity policies demanded by Greece’s international lenders, Papandreou has carried the parliamentary group of his PASOK party with him, despite much grumbling within the ranks.

But a steady trickle of defections has reduced his majority to the point that one or two waverers could inflict a defeat in the confidence vote, expected as late as midnight (2200 GMT).

UNFOLDING DRAMA

Greeks gripped by the events gathered around newsstands to catch a glimpse of the headlines on Friday.

“We are like goldfish, waiting with our mouths open,” writer Metros Tatsopoulos told Greek television, referring to the unfolding political drama.

PASOK has 152 deputies in the 300-member parliament. But one lawmaker said that while she would stay in the party, she would not back the government in the confidence vote, meaning Papandreou could count at most on the support of 151 deputies.

Only one more defection would strip the government of its majority and probably trigger an early election.

The financial daily Kerdos captured the mood with its headline: “Everything on a knife-edge,” while the pro-government daily Tan Neap ran with: “A balancing act on the edge of a cliff.”

European and Asian shares rose and the euro steadied on hopes the referendum would be abandoned. But investors remained cautious about the confidence vote and the prospect of snap elections.

Finance Minister Evangelos Venizelos pledged to drop the referendum in telephone calls to European leaders, the ministry said.

Papandreou has called on his PASOK party to rally behind him in the confidence vote. But his public bravado appeared to mask an acceptance that his term may come to an end soon.

Government sources said Papandreou had struck a deal at a cabinet meeting on Thursday under which he would stand down after he had negotiated a coalition agreement with the conservative opposition — provided he survives Friday’s vote.

Ministers involved in striking the deal with Papandreou, led by Venizelos, said he should go for the sake of their PASOK party, said the sources, who had knowledge of Thursday’s meeting of the cabinet.

“He was told that he must leave calmly in order to save his party,” one source told Reuters on condition of anonymity. “He agreed to step down. It was very civilized, with no acrimony.”

Papandreou admitted he had made a mistake in calling on Monday for the referendum on a bailout, the sources said.

Even some of his loyalists have suggested it was time for him to quit after they backed him at the confidence vote.

“I do not want to humiliate my party’s president — the country’s prime minister — by toppling him tonight,” PASOK lawmaker Telemachos Hytiris told state television.

“But I want him now to rise to the occasion as a prime minister who has won the vote of confidence with prestige and start discussions tomorrow on a unity government so the country can move ahead.”

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