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

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  • rate this

    Comment number 18.

    Yesterday, Sarkozy's EU leader, Jean Leonetti stated, "Greece is something we can get over, something we can live without.”
    Greece has not only lost its sovereignty - it is rapidly losing all the characteristics that define statehood & i.d. nation. Moreover, there isn't a damn thing that Greeks can do about losing their country short of a massive revolt.

  • rate this

    Comment number 17.

    Only a few days ago: "Papandreou Is Right to Let the Greeks Decide" That was Sven Böll's opinion, writing for Der Spiegel; in just 3 days Merkel/Sarkozy essentially stripped him of his power as PM of Greece & put a stop to his nonsense about letting the people determine their own future. Papandreou retreated. Masks got ripped i.e. "democracy" & "sovereignty.

  • rate this

    Comment number 16.

    When you suggested to MP this type of in-out-Euro talk could easily have been a bluff intended to intimidate Greece, response was, "yes, but we cannot take the chance". That, my friend, is what Germany/France are counting on. Do you think France/Germany would really start meltdown by carrying out the threat?
    I think not!

  • rate this

    Comment number 15.

    I so wish Mr. Papandreou had held to his guns on a referendum, but with question being: "Should the Greek debt undergo a full Audit Commission to ascertain what is Greek's true level of debt (subject to repayment) & what portion is odious (subject to write-off). I think he was too shaky. too rushed; he really needed to call the German/French bluff.

  • rate this

    Comment number 14.

    The only blame here lies solely at the feet of the EU Commissars, who for the last 30 years have socially engineered the new Europe, convincing all members we are equal in living and trading standards - Problem is the world of Commerce doesn't run to a perfect plan, there are winners and losers across the globe - that's life.

  • rate this

    Comment number 13.

    Contrary to appearances, Papandreou has behaved very shrewdly. The referendum threat has forced the main opposition party to come out in support of the bail out deal for the first time (although they still oppose specific austerity measures). He will almost certainly have to go, but he has brought about more resolution and consensus than Europe's posturing and incompetent leaders had managed.

  • rate this

    Comment number 12.

    wracked with humour??

  • rate this

    Comment number 11.

    Regardless of how untidy it all looks he now managed to “explain” it to the over expecting Greek public that demonstrations not going to resolve the problem and it is time to: A. Go to work, work hard and PAY TAX or B. Risk it all

  • rate this

    Comment number 10.

    When gangrene is so far advanced to save the patient you cut away the limb. The G20 surgeons should say, not privately, but publicaly not only to the patient (Panandreou) but to his family (the Greek people) the limb (Euro) is being taken away. Learn to live in a wheelchair because a prosthetic Drachmai will never support you.

  • rate this

    Comment number 9.

    Greeks would have voted to stay in EU anyway. No one will benefit from a bankrupt state. Not the people of Greece, nor the rest of Europe. Even Britain holding less than 14Bn Euros of Greek debt, would nose-dive into a recession. And I am not even considering the domino effect with the rest of the PIGS. G-pap is simply brilliant! even at the 11th hour he is masterminding his exit strategy!

  • rate this

    Comment number 8.

    It's shocking that an attempt to give people a democratic say in this matter has been met by rage and oppression by the EU leaders.

    What are they afraid of?

  • rate this

    Comment number 7.

    Paul Johnston, PhD Economics, Athens

  • rate this

    Comment number 6.

    This referendum should take place.I personally think this bail out is to save the banks and not greece.Its nots going to work .How will Greece even with the haircut pay its debts with the economy shrinking?
    Funny the poor must pay and the rich nothing .
    Merkel and Sarkoszy this is doomed to FAIL!

  • rate this

    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.

  • rate this

    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

    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

    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

    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.



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