Greece's Papandreou in crisis talks over bailout revolt

 
Greek PM Papandreou 1 Nov 2011 Mr Papandreou was expected to fend off calls for a snap election at the cabinet meeting

Greece's government is holding an emergency meeting following a day of turmoil triggered by PM George Papandreou's announcement of a referendum on the proposed EU bailout.

One MP from the governing Pasok party has resigned, cutting Mr Papandreou's parliament majority to two.

Six other leading party members have called on him to resign.

US and European markets, calmed by last week's EU bailout plan, have fallen sharply since the announcement.

The Greek government also faces a crucial confidence vote in parliament on Friday.

News of the referendum even took Greece's Finance Minister Evangelos Venizelos by surprise, Greek media reported.

As the latest crisis unfolded, it was announced that Mr Papandreou would meet German Chancellor Angela Merkel and French President Nicolas Sarkozy along with leaders of the EU, the International Monetary Fund (IMF) and eurozone leaders on the fringes of the G20 summit in Cannes on Wednesday.

Start Quote

France and Germany are convinced that this agreement will allow Greece to return to sustainable growth”

End Quote French-German joint statement

The Greek opposition has called for early elections, saying the referendum jeopardises Greece's EU membership.

Mr Papandreou says he needs the backing of a referendum to successfully implement the tough reforms demanded by international lenders.

He has, however, ruled out elections.

Last week, eurozone leaders agreed on a 100bn-euro loan (£86bn; $140bn) to Athens and a 50% debt write-off.

In return, Greece must make deep cuts in public spending, slashing pensions and wages and making thousands of civil servants redundant.

On Tuesday, Pasok MP Milena Apostolaki quit the parliamentary group in protest but said she would keep her seat to fight the referendum as an independent.

"I have an obligation to resist this erroneous political choice that divides the nation," she said.

Shortly afterwards, another MP from Mr Papandreou's centre-left Pasok party, Vasso Papandreou (no relation), called for a government of national unity, to be followed by snap elections.

Analysis

It is clear that the decision to hold a referendum in Greece on the deal done five days ago came as a complete surprise to the German government.

Rainer Bruederle, one of the leading politicians of the governing parties in the Bundestag said: "This sounds to me like someone trying to wriggle out of what was agreed - a strange thing to do."

He was economics minister until recently and said it was now necessary to prepare for Greece to go insolvent. He said if Greece didn't fulfil its agreement "Europe would have to consider turning off the flow of money which was keeping Greece afloat".

Chancellor Merkel and President Sarkozy talked on the phone and then agreed to meet in Cannes the day before the G20 is due to start.

A terse joint statement made no reference to the referendum, saying baldly: "France and Germany are determined to ensure the full implementation in the quickest time frame, the decisions adopted at the (EU) summit."

There is much dismay in government circles and a sense that the deal that was done with such difficulty may now be unravelling at great consequence to Europe and its citizens.

"I call on the president to convene the council of political leaders with the goal of forming a government of national salvation in view of safeguarding the EU package agreed on 27 October, and then to immediately hold elections," said Ms Papandreou, who chairs the parliamentary committee on economic affairs.

Antonis Samaras, leader of the main opposition New Democrats, met Greek President Karolos Papoulias for talks on Tuesday morning.

"In order to save himself, Mr Papandreou has posed a dilemma of blackmail that puts our future and our position in Europe in danger," Mr Samaras said after the meeting.

Mr Papandreou's office said that in a phone call with Chancellor Merkel earlier on Tuesday, the Greek prime minister had insisted the referendum would "strengthen" Greece in the eurozone and globally.

President Sarkozy and Chancellor Merkel earlier issued a joint statement saying they were "determined to ensure with their European partners the full implementation, as quickly as possible, of decisions taken by the (EU) summit, which today are more necessary than ever".

"France and Germany are convinced that this agreement will allow Greece to return to sustainable growth."

The next Greek elections are not scheduled until 2013.

Opinion polls in Greece show that most people do not support the austerity deal. The most recent general strike, on 19-20 October, brought tens of thousands out on to the streets nationwide.

No date for the referendum has yet been announced, but Mr Papandreou indicated it would take place in a few weeks' time, once the details of the bailout package have been finalised.

Latest planned austerity measures

  • New pay and promotion system covering all 700,000 civil servants
  • Further cuts in public sector wages and many bonuses scrapped
  • Some 30,000 public sector workers suspended, wages cut to 60% and face lay off after a year
  • Wage bargaining suspended
  • Monthly pensions above 1,000 euros to be cut 20% above that threshold
  • Other cuts in pensions and lump-sum retirement pay
  • Tax-free threshold lowered to 5,000 euros a year from 8,000

Mr Papandreou has called a vote of confidence in his government for Friday.

Meanwhile, Mr Venizelos was taken to hospital on Tuesday morning, suffering from stomach pains. His office said he was likely to be released by the evening.

On Tuesday evening, state-run Net Radio reported that Mr Venizelos was to undergo surgery, however there was no official confirmation.

Mr Venizelos was given no warning that Mr Papandreou intended to call a referendum, an anonymous government official told the Reuters news agency, on condition of anonymity.

"Venizelos had no idea about the referendum. All he knew about was the vote of confidence," he said.

"He told Papandreou he should inform foreign partners and a letter was drafted in the early hours."

 

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  • rate this
    +2

    Comment number 220.

    183. Dodued_ch
    "In the center of this European "Union", Switzerland is doing well"
    //////
    Not that old hat again. Credit Suisse are slashing 1500 jobs. A close relative of mine works for a company near Zurich who are cutting their workforce from 1500 to 700, etc etc. Read the news for facts, it'll help.

  • rate this
    -2

    Comment number 219.

    Could this be the time for a new currency, how about we all adopt the US dollar

  • rate this
    +1

    Comment number 218.

    It doesn't seem likely that the Greeks would vote for the austerity measures. I suspect that the Greek people are in denial, as they know that many of them have contributed to their country's woes due to widespread tax avoidance via the cash economy.

  • rate this
    0

    Comment number 217.

    Greece is not going to be able to deliver the austerity measures and reduce even a 50% debt burden with little or negative growth. To me the only realistic option they have is to default all of the debt, voluntarily leave the euro (the rules do not allow others to remove them), reinstate and then manage/devalue their currency. The EU Zone was doomed when they relaxed their criteria.

  • rate this
    +1

    Comment number 216.

    @162.strayawaychild, I remember the bands name a few minutes after posting. Cracking info. BTW, while you guys in Europe are waiting for all this finacial conflict, I'm sitting in my garden in Bangkok, like King Kanute, waiting for floods to come to my district. Sandbagged up, no info from Government, when is it coming & waiting. How long has ... At least it is nice & warm here.

  • rate this
    +1

    Comment number 215.

    Growingly? Thats an interesting word. Did they really think they could manage a currency and the fiscal elements behind it through the consensus of totally economically and culturally different states. Never mind have to contend with their intolerably arrogant political leaders and than have to defer every vital decision - that requires more than anything swift decisive action - to a referendum.

  • rate this
    +5

    Comment number 214.

    Why don't the German people get to have a referendum on the latest Greek bailout?

  • rate this
    +2

    Comment number 213.

    "207.
    digbic78
    1 Minute Ago

    re203 rufus

    lol.I expalined that the thread has gone on a tangent and you tell me to keep up"


    No it's still a HYS on the Greeks and the bailouts, not on the UK & the EU. Just as well we didn't have a referendum - you'd probably think it was about fox hunting or something.

  • rate this
    +1

    Comment number 212.

    Euro wide, the people are becoming wise to politicians who collectivly have been carrying out the agenda of bankers and multi-nationals for years . Right from the beginning, this 'Euro State' , has been established thru' 'gradualism' and the people have been sidelined as their jobs, savings , pensions and very democracy , has been set aside by 'Quisling' politicians. Good on the Greek people !

  • rate this
    +3

    Comment number 211.

    Never mind all the politics and the calculations of this person's interest or that person's, let's try and see objectively things as they really are.
    This crisis was created by bankers colluding with politicians - the one trying to get us more and more into debt, the other hoping to win votes.

  • rate this
    -6

    Comment number 210.

    This should not be about money, it should not be about the big German and what ever other countries banks loaned money to Greece. When you make a wager (and that is what these banks are doing) you know you may lose. This is about people! Vote NO Greece and you will not stand alone, you will have millions of European people ready to do the same, and take back what has been stolen from us all..!

  • rate this
    +4

    Comment number 209.

    Let the Greeks have their referendum and the Germans and the others who offered help theirs.
    No help to Greece till they start being honest with themselves and stop saying they are not to blame. Till then any money lent is wasted.

  • rate this
    0

    Comment number 208.

    #In the center of this European "Union", Switzerland is doing well. #

    66% GDP from banking because Swiss banks are admired worldwide to be reliable. There is a lot of trust worldwide. Trust ...hm can you imagine how long it will take for ANY Greek govts to be entrusted in, if this is going wrong?

  • rate this
    -3

    Comment number 207.

    re203 rufus

    lol.I expalined that the thread has gone on a tangent and you tell me to keep up.lolGlad to see you don't read and cannot keep up with fast moving situations.I do hope you are not british as It would be a tradegy and a confirmation that the populace of the uK are unable to do a referendum

  • rate this
    -10

    Comment number 206.

    The economic markets are in turmoil, the EU zone is on the brink of collapse and after weeks of speculation and negotiation to other EU leaders becoming unpopluar in their own voting countires as a result a bail out was established.. Greeces response we will let the public decide well why you are doing what you must remember the effort all other EU country have made and the position we could be in

  • rate this
    +1

    Comment number 205.

    133.Herman Mittelholzer So many people in power in Greece want to see the bailout fail because they have been busy amassing Euros. A switch back to a devalued Drachma will mean they can use their Euros to buy most of Greece on the cheap. The corruption in the state finance system has risen, it might appear, right to the top of the tree!

    Exactly right my friend ;)

  • rate this
    +3

    Comment number 204.

    Guess they need a referendum - come on uk show them the way (knurf...).

  • rate this
    0

    Comment number 203.

    "193.
    digbic78
    2 Minutes ago

    re172-rufus

    Are you for real?none.Why would it?At what point do I make any reference to the Greeks in this post?
    You may not be able to grasp this however this thread has thrown up plenty of tangents for us to go down.Try to keep up so I don't have to expalin the obvious."


    This HYS is not about the UK and a referendum to stay in the EU. Please do keep up.

  • rate this
    -2

    Comment number 202.

    This is all about bailing out the banks part two. Would you vote for it?

  • Comment number 201.

    This comment was removed because the moderators found it broke the house rules. Explain.

 

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