Papandreou blinks first in euro poker game

 

ATHENS - The last 24 hours have seen all manner of political gyrations here. If one had to sum up what it has all meant, it is that the government of George Papandreou has felt the heat from Europe's most powerful players and realised that it cannot take it.

This city is still wracked with rumour about how he might bring Greece through this acute phase of its ongoing crisis, but the prime minister seems to have realised that either he, or his plan to put the European Union's bail out package to a national referendum, will have to go.

German Chancellor Angela Merkel on Wednesday characterised Mr Papandreou's proposed vote as a game of poker, and she was evidently determined that he should blink first.

Briefing from European Central Bank and EU officials that failure in the referendum would force Greece out of the euro and, some suggested, of the EU itself has startled many people here.

Soundings of public opinion suggest that most could oppose the bail out because of its accompanying austerity measures, but that the majority of Greeks are still in favour of remaining in the EU.

The linkage between a possible No vote and continuing membership of the union proved too much for many of Mr Papandreou's supporters, including his Finance Minister Evangelos Venizelos, who this morning withdrew his support from the referendum plan.

Many Greeks still feel they should be at the heart of Europe, and the sharp response to Mr Papandreou's referendum plan - particularly from France and Germany - put that role in jeopardy.

Speaking to his party in parliament on Thursday evening, the Greek leader said he had been told during those Cannes talks that not only would a "no" in the referendum mean leaving the euro, but that the question of rejoining would be off the agenda for at least a decade.

When I suggested this evening to an MP from his party that this type of talk could easily have been a bluff intended to intimidate Greece, they replied, "yes, but we cannot take the chance".

The issue of whether France and Germany could really precipitate a meltdown of the Greek economy by withholding as they had threatened, the 8bn euros in emergency aid needed to keep the economy afloat during the coming week is therefore unlikely to be tested.

A decision by Mr Papandreou to backtrack on the referendum plan would suggest that Mrs Merkel has won her poker game.

On Thursday morning it became apparent that the prime minister, who has a small majority, faced a big enough revolt within his party to make it unlikely that he could win a vote of confidence, and so press on with his referendum.

At times it was rumoured that he had gone to the president's office to tender his resignation.

When he appeared in front of his party in the evening, Mr Papandreou tried another option. He suggested that the opposition join him in endorsing the European bail out plan, implying that this could make a national vote unnecessary.

Until now, the New Democracy party, his main opponents, have refused to back the European rescue plan or the referendum, calling instead for immediate parliamentary elections.

Where does this all leave us? It shows that Mr Papandreou would prefer to avoid the referendum by gaining cross party support for the economic hardship that will inevitably follow acceptance of the EU bail out.

Whether people come to agree that he has successfully intimidated the New Democracy opposition into supporting these measures or whether he has overplayed his hand, infuriating Greece's creditors, and will soon have to resign are questions for tomorrow.

 
Mark Urban, Diplomatic and defence editor, Newsnight Article written by Mark Urban Mark Urban Diplomatic and defence editor, BBC Newsnight

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  • rate this
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    Comment number 1.

    It is a bit trivial, in the long run, "who blinked first" on this day in 2011. It still remains the case that what cannot happen will not happen. What "cannot happen" is that Greece can ever restructure its economy so as to be as productive as Germany, so as to be as competitive as China, whilst having a grossly overpriced economic position because of being within the Eurozone. It is impossible.

  • rate this
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    Comment number 2.

    Being poor is not that bad, being poor when you've been rich, that's really hard.
    Greek was a poor state that knew it's place in the World and was happy with it's lot. Pump in massive amounts of EU money (yep that would be UK taxpayer money), cook the books, corrupt the nation, raise expectations of an eternal something for nothing culture. What a mess, the army will be in charge within 12 months.

  • rate this
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    Comment number 3.

    Well, maybe the army will not be in charge in twelve months. I'd say 18.

    I find it nothing short of hostile that there has been zero news reporting in the mainstream media about the decision to sack the 6 top generals in the greek armed forces on the same day as the referendum was announced.

    Europe is conspicuously becoming an ideological battleground where party membership confers class status.

  • rate this
    -1

    Comment number 4.

    Well, jinn of referendum was released from the bottle, and nobody can lock it back. Now the referendum will take place anyway - either by voting and reasonably quickly or by strikes, layoffs, demonstrations, clashes with police etc. - and the latter variant probably will take significantly more time. So, it would be better for Germany and perhaps also for France to permit referendum by voting.

  • rate this
    +1

    Comment number 5.

    Who's going to pay for your referendum George? You don't have any money and now you don't have any friends. Thanks for the great leadership and goodbye. Next.

 

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