Facing a no-confidence vote on Friday after a tumultuous day of political gamesmanship, Prime Minister George A Papandreou has called off a referendum on Greece’s new debt deal with the euro zone after winning a measure of support from his opposition and managing to repair, at least temporarily, a major rupture in relations with Europe.
The decision on Thursday to abandon a proposed popular vote on the European debt deal did not end the political turmoil here; Papandreou still faces a rebellion in his own Socialist Party and the fury of some opposition figures, and the confidence vote later on Friday is seen here as a difficult challenge. But talk of a possible unity government eased international fears of immediate new elections and a looming default if he did not survive in office, cheering markets in Europe and abroad.
Stocks rose by as much as three per cent in Asia on Friday, following the developments from Athens. The leading indexes in Britain, France and Germany opened modestly higher, despite the prospect of further wrangling among Greek politicians, but the German DAX soon began to slide.
In an address to his party’s central committee on Thursday evening, Papandreou said there was no need for a referendum, now that the opposition New Democracy Party had said for the first time that it would back the agreement, reached last week, to write down Greek debt in exchange for austerity measures and a commitment to the euro as the nation’s currency.
The prime minister invited the New Democracy Party to become “co-negotiators” on the deal and later said that talks on a unity government should begin immediately. He also suggested he would be willing to step aside so that others could form a unity government if he won Friday’s confidence vote. “I am not clinging to my seat,” he said.
He made those comments after the New Democracy leader, Antonis Samaras, accused the prime minister of “deception.” Samaras was angry that Papandreou appeared to be trying to hold on to his post after securing the opposition’s cooperation.
Papandreou’s decision to call off the referendum followed three days of political tumult that whipsawed world markets, shook the Continent to its foundations and drove angry European leaders to issue an ultimatum on Wednesday, demanding that Greece decide once and for all if it wanted to remain a part of the European Union and its currency bloc, the euro zone.
But after a day of political maneuvering , Greece’s Byzantine political storm began to look less like points of departure for Europe than hastily considered parliamentary maneuvers by a prime minister looking for a way to shore up support with both the Socialists and the opposition — or to negotiate a graceful exit. As has happened so often in the euro crisis, the fate of the European enterprise seemed to hinge on the political machinations of one of the union’s smallest members.
At first, Papandreou was said to have offered to resign before the confidence vote on Friday. By late afternoon, however, the Greek news media reported during the cabinet meeting that he not only was refusing to resign but was calling off the referendum.
Late Thursday, there were reports that Papandreou had agreed to step down following the confidence vote on Friday, after members of his cabinet urged him to do so for the good of the party. The prime minister, by this account, did not resist the idea. He has offered no hint of that in public, saying he is simply trying to do what is best for Greece, which is to keep it in the European Union and the currency zone.
“The question was never about the referendum but about whether or not we are prepared to approve the decisions on October 26,” he said, referring to the European Union’s debt deal, which wrote down some of Greece’s privately held debt by 50 per cent, cutting the nation’s private and public-sector debt burden by about 30 per cent over all. “What is at stake is our position in the EU.”
The finance minister, Evangelos Venizelos, confirmed the referendum had been canceled and said the government should seek approval of the loan deal from a broader majority of 180 members in Parliament — which would require support from some of the opposition — rather than the simple majority of 151 that had backed previous measures.
Few Greeks, weary of austerity, seemed to have faith in their politicians. No matter who is in power, “it will stay the same,” said Stefanos Merkouris, a waiter in Athens. “Nothing’s going to change.”
The political situation is fraught with uncertainty. Whatever the outcome of the confidence vote, someone — either Papandreou or his designated successor — will have to sit down with Samaras to negotiate their conflicting visions.
Samaras has made it clear that he will not negotiate a unity government with Papandreou as prime minister, portraying his actions throughout the day as underhanded tactics to cling to power. “He’s lying, he’s blackmailing, maneuvering inside Greece and beyond, all in order to hold on to his position,” Samaras said in an address to lawmakers on Thursday. He said he had asked the prime minister to resign.
A source in New Democracy said the party wanted a caretaker government as a stopgap until elections in six weeks.
Before members of New Democracy walked out of Parliament on Thursday night, Samaras accused the prime minister of having backed off his referendum plan only after European leaders “reproached him” at a Group of 20 meeting in Cannes, France, on Wednesday. “He is trying to convince us that he brought everything crashing down just to secure backing for an agreement that I had already supported on October 27,” Samaras said.
The decision to drop the referendum was announced after Papandreou secured Samaras’s backing for the loan deal. Samaras maintained that he had never rejected the deal itself, only the government’s handling of it. His voting record shows that he has opposed all measures related to the deal and previous bailouts.
In spite of the political chaos, there was an element of déjà vu to the events on Thursday. In June, Samaras had rejected the prime minister’s offers to form a coalition government with Papandreou at the helm. The two may be at the same impasse on Friday.
“This negotiation will succeed, or it will fail on the basis of personal antagonism,” said George Kirtsos, a political analyst and the owner of City Press, an Athens newspaper. “Since Samaras says part of the deal has to be that Papandreou will stand down, and Papandreou has not yet accepted it, it’s a kind of political poker, and you don’t know how it will end.”
Still, he added, “Something has begun to change in the political system. New Democracy used to say no to an agreement reached at the summit; Papandreou used to say no to a transitional government.”
Even if he survives in office, the prime minister is widely seen as having expended nearly all of his political capital. Ever since Greece asked for a bailout from the European Union in April 2010, he has struggled to satisfy seemingly irreconcilable constituencies: the Greek electorate and the nation’s foreign lenders.
