Saturday

26th Sep 2020

Papandreou pulls back from referendum

  • Papandreou appears set to step down (Photo: France Diplomatie)

Greek Prime Minister George Papandreou has backed away from holding a referendum on a €130 EU bail-out deal and has agreed to talks with the conservative opposition over the construction of a transitional government leading to early elections.

Papandreou said after an emergency cabinet meeting that the referendum “was never a purpose in itself”.

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It appeared earlier in the day that the leader was readying himself to step down and was likely to be replaced by a former vice-president of the European Central Bank, Lucas Papademos, after a series of his ministers deserted him.

A Greek official had confirmed to this website that Papandreou’s resignation “appears to be true”.

The official told EUobserver “several names are circulating” beyond Papademos, who was Greece’s representative on the board of the ECB from 2002 to 2010.

It remains unclear whether the prime minister still intends to step down. The opposition New Democracy party has said that it is willing to participate in a unity government if Papandreou goes.

At an emergency meeting of his cabinet on Wednesday following talks with German Chancellor Angela Merkel and Nicolas Sarkozy in the morning, it is understood that six of his ministers led by finance minister Evangelos Venizelos pulled their support for the leader due to their opposition to his plan to hold a referendum asking the Greek people whether they supported a deal reached with other EU leaders at a summit in Brussels on 26 October.

Papandreou’s shock announcement that he would seek the democratic endorsement of a programme that would see the country put under permanent supervision of the EU-IMF-ECB troika and years of further austerity infuriated other European capitals.

Late on Wednesday, the finance minister declared in a public statement his opposition to the referendum and called for the formation of a government of national unity, a move that appeared to have tipped the balance against the prime minister.

Deputies also began to signal that they would not vote in favour of a referendum and on Thursday, MP Eva Kaili said she would vote against the government in a vote of confidence scheduled for Friday, meaning that Papandreou now has in principle the support of just 151 lawmakers in the 300-seat house.

The former ECB man, should he become Greece’s new leader, has a doctorate in economics and is know to be a strong supporter of the austerity strategy being imposed.

Delivering a lecture to the Association of Greek Bankers last November, he said that the government had been courageous in what it had achieved but deeper public spending cuts were necessary.

"If we do not have real and long-term economic discipline we can not ensure financial stability," he said.

The proposal to hold a referendum on the new Greek bail-out or a question asking whether the country should stay in the eurozone appears to have been shelved, although on Wednesday, eurogroup chief and Luxembourgish Prime Minister Jean-Claude Juncker said that officials were at work on options should Greece exit the single currency.

Asked by a reporter what were to happen were the country to leave, Juncker said in an interview with ZDF Morgenmagazin: "We are working on the subject of how to ensure there is not a disaster for the people in Germany, Luxembourg, the euro zone. We are absolutely prepared for the situation which I describe and which I want to be avoided."

Also on Friday, the European Commission said that if Greece were to leave the euro, it would have to leave the European Union as well.

"The treaty doesn't foresee an exit from the eurozone without exiting the EU," spokeswoman Karolina Kottova told reporters in Brussels.”

EU tells Greece: Choose the euro or go

Europe delivered a stark ultimatum to Greece on Wednesday night, demanding that the country’s planned referendum ask plainly whether the country’s citizens wish to stay in the euro or to get out.

€8bn Greek payment on ice until referendum

Greece will not receive an €8 billion tranche of EU and International Monetary Fund (IMF) money until after its referendum on the eurozone rescue plan, reports indicate.

Opinion

Democracy at a discount

With his referendum initiative, Papandreou has put democracy on the agenda and made clear that the management of the eurozone crisis is a battle over what should have the upper hand: Economics or politics;capitalism or democracy, asks Erik O. Eriksen.

Opinion

The EU's 'techno party' is hollowing out democracy

Under the EU's 'techno-party' strategy - governance by technocrats rather than democrats - economic policies can now only be decided by bureaucrat and bankers in Brussels and Frankfurt.

EU countries stuck on rule of law-budget link

Divisions among EU governments remain between those who want to suspend EU funds if rule of law is not respected, and those who want to narrow down conditionality.

EU forecasts deeper recession, amid recovery funds row

The economies of France, Italy and Spain will contract more then 10-percent this year, according to the latest forecast by the EU executive, as it urges member state governments to strike a deal on the budget and recovery package.

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