Papademos Receives Vote of Confidence But Disagreements Fester Inside Frail Coalition

The government of Loukas Papademos received a vote of confidence in parliament today. 255 MPs voted in favour, 38 against. Three deputies from the coalition broke with party discipline to vote against. Conservative Panos Kammenos was expelled from New Deomcracy, making him the second MP to suffer that fate in two days after Sotiris Hatzigakis. Pasok did not move to discipline Panayotis Kourouplis and Christos Katsouras.

Papademos already faces problems in releasing the 8bn euro instalment of the bailout. He asked the leaders of the three parties in his coalition to sign a letter saying they stand by the terms of the IMF and eurozone-sponsored bailout.

But the leader of the conservative New Democracy party – Antonis Samaras - is refusing to sign. Samaras’ signature is important for 2 reasons: Greece’s European creditors want his signature, because he has was in opposition to many of the country's austerity measures, saying they have made Greece’s recession worse and put people out of work. And Polls suggest he is set to become the next prime minister after elections that could take place as early as February.

The Conservative Conundrum

Conservative New Democracy leader Antonis Samaras insists that he won't sign a letter binding him to the terms of an October 26 bailout agreed in Brussels. Without that letter, says Commissioner Olli Rehn, Greece's next instalment of 8bn euro will not be released; and without that, Greece will have difficulty meeting payroll beyond December 15. So is Samaras going to be responsible for Greece going into disorderly default?

Newly installed Prime Minister Loukas Papademos put the ball very much in Samaras' court during his first parliamentary address yesterday, when he declared that Greece's written consent was the last remaining obstacle to receiving the money.

Samaras' position is understandable from a certain point of view. He expects to be elected to lead the country in February or March, or at least to the position of top party in parliament by number of seats. A recent poll by Public Issue published in Sunday's Kathimerini gives him anything between 121 and 132 seats - not enough to form a government on his own, but far above the maximum of 61seats it gives Pasok. When the next coalition talks happen, it will be Samaras and not Papandreou who will be in the driver's seat.

Samaras knows that he cannot hope for voter approval if he is the cause of a default. It is to be expected, therefore, that some kind of compromise will be reached. Samaras will have to agree to sign some bit of paper, and will publicly fuss over its precise wording. New Democracy must not appear to block the 6th instalment, nor to compromise its room for manoeuvre before it is elected.

The Bill for Incompetence Has Arrived

Having lost financial credibility and then political credibility to pull itself out of its sovereign debt mess, Greece has now lost credibility even in the media. No one seems to be sure if or when a new government will be announced.

Prime Minister George Papandreou has brought this upon himself and the country. New Democracy committed itself to talks resulting in a national unity government last Sunday. Papandreou has the parliamentary majority and constitutional prerogative of naming the next premier. Instead of leading talks, he allowed himself to be dragged through four days of postponements. He has now bid farewell three times: in a speech to parliament last Friday, in a cabinet speech last Tuesday, and in a national address last night. Such prolonged death scenes do occur in the opera, but without the notes they lower the dignity of the reluctantly departed.

The plot of this particular musical theatre suits it more to the genre of operatic farce, with suitors and jealous ministers hiding in closets and passing notes. The media, like the public, have been played like a sounding board, broadcasting the names of jumped-up hopefuls or of personalities who had no idea they were up for the job. Finance Minister Evangelos Venizelos circulated his name, and is said to have secretly approached opposition parties in a parallel negotiation to the prime minister's. Someone at Pasok party headquarters told Reuters it would be Vasilis Skouris, the Greek head of the European Court of Justice. Apparently he never received a phone call. Greek media outlets aligned with New Democracy claimed with certainty that it would be former Euro-MP Ioannis Koukiadis, a friend of conservative leader Antonis Samaras.

Greece Still Without Interim Government After Papandreou Farewell

The naming of an interim Greek government was postponed for a fourth time on Wednesday night, as Prime Minister George Papandreou and conservative opposition leader Antonis Samaras left the presidential office without an announcement. Greek media were reporting on Wednesday evening that Parliament Speaker Philippos Petsalnikos had been named to lead Greece's interim government, causing uproar in the socialist party. Talks had been ongoing throughout the day for a fourth day between the two parties.

Earlier the embattled Papandreou stepped down after leading his country through the crisis for two difficult years. The interim government that is to ratify a second bailout the country badly needs and then take the country to an election next year was supposed to be announced an hour later.

George Papandreou bid Greeks an emotional farewell after four days of gruelling negotiations with opposition conservatives on the makeup of the interim government that will succeed his. He called the new government an end to the acrimony of the past months, and said it would represent Greek solidarity to the outside world. Its aims are clear, Papandreou said – to unblock the next instalment of an existing bailout package and ratify a second, 100bn euro bailout. Without the money Greece will default in a matter of weeks. He also called on the new administration to continue structural reforms to turn the economy from austerity to development, and reverse four years of recession.
 
At 6pm local time, Papandreou delievered the following address:
 
"Today we are doing what is nationally necessary and understood. The political forces are putting their support behind the country’s next political steps. This is necessary for the country to emerge from a crisis born of the mistakes of the past and an international crisis.

Loukas Papademos Candidacy On The Ascendant

Former Bank of Greece Governor Loukas Papademos is again today considered the favourite for prime minister in discussions among Greece's political leaders. His candidacy was said eysterday to have waned in favour of Nikiforos Diamantouros, the highly regarded head of Greece's Ombudsman for a decade.

A banking source told The New Athenian that Papdemos had raised the bar on negotiations between Prime Minister George Papandreou and opposition leader Antonis Samaras by placing strict conditions on the table. Among them is a stipulation to hold elections no sooner than May, allowing the interim government time to ratify the October 27 bailout offer from Brussels, implement reforms and cement a new relationship with the Eurogroup and financial system. The banking source also said Papademos was keen on appointing Vasilis Rapanos, head of the National Bank of Greece, as finance minister in place of Evangelos Venizelos.

The coalition is designed to unite ruling socialists and opposition conservatives, whose bickering over the past months has brought the government to its knees. Conservative leader Antonis Samaras has completely abandoned his anti-austerity stance and adopted the government position that ratification of the latest bailout deal from Europe is “inevitable”. 

Earlier today the prime minister thanked the cabinet for what he called historic reforms decades overdue, and collected their resignations. 

Pasok, New Democracy To Announce Interim Government

Greece was poised on Tuesday to announce an interim government and end a crisis of confidence that threatens to derail a 100bn euro bailout agreement crucial to the eurozone's survival. The country's political leaders had said they would make the announcement on Monday, but talks dragged into a third day amid disagreements over who would lead the government.


Socialist prime minister George Papandreou and conservative opposition leader Antonis Samaras met for almost 90 minutes under the auspices of the country's president. A commuinique issued after they broke off negotiations for the night said they would name the caretaker prime minister and cabinet the following day. The new government's agenda would be the ratification of a 100bn euro bailout for Greece which the eurozone approved last week, and the implementation of an austerity programme attached to that bailout. It would then take the country "immediately" to a new general election, the communique said.

Papandreou Looks for Scarce Friends After Vote of Confidence

Greek Prime Minister George Papandreou was scheduled to see the country's president today, to discuss the formation of a coalition government that would ratify the Greece's second bailout package.

The coalition talks were the promise Papandreou gave MPs in asking parliament on Friday night for a vote of confidence, saying that he would be willing to lay down his premiership if that brought closer the prospect of a coalition government the following day.He received 153 votes, all from socialist MPs.

Papandreou expressed all other political initiatives - approving the second bailout; unblocking the sixth instalment from the first bailout; forming a coalition government with conservative New Democracy; and holding a general election - as dependent on his government's survival.

Challenge from Finance Minister Could Topple Greek Government Tomorrow

Greek Prime Minister George Papandreou is fighting for his political life after his finance minister and two other ministers withdrew their support for a referendum on the latest European bailout plan announced on October 26. Papandreou has lost a critical mass of support from his parliamentary bloc that make a vote of confidence tomorrow tantamount to suicide. His preference for a referendum also seems doomed because ministers and MPs have distanced themselves from the proposal as too risky.

The demise began late last night when Deputy Prime Minister and Finance Minister Evangelos Venizelos openly challenged the prime minister’s insistence on a referendum, which would let the people decide whether Greece should accept Europe’s latest bailout plan for Greece. This just hours after Prime Minister George Papandreou met with the French and German leaders in Cannes, and secured their reluctant agreement to the referendum. But the eurozone’s leaders suspended Greece's sixth instalment of 8bn euro under the existing bailout, and said, the referendum has to be on whether Greece wants to remain within the euro. That is exactly what Greece's opposition parties and many ruling party MPs don't want to risk, because it could signal a Greek return to the drachma. In a gruelling cabinet meeting that started on Tuesday and ended on Wednesday, Papandreou had been convinced not to frame the referendum as a question of remaining within the euro.

Venizelos said Greece’s membership of the euro should not be risked on the outcome of a referendum. That makes him the only cabinet member to disagree with the initiative, which ends the consensus reached in the small hours of Wednesday after a gruelling cabinet meeting, and could split the party ahead of tomorrow's vote of confidence. It also makes him the fourth socialist member of parliament to dispute the referendum, putting the party's mathematical majority in the red by two votes.

Venizelos is thus setting the stage for a succession, either immediately or after the vote of confidence if it fails. If he feels he has the support of the party's 151 remaining MPs (after two declarations of independence since Tuesday) and a handful of independents, he could oust Papandreou through a parliamentary procedure similar to that seen in January 1996, which replaced the ailing Andreas Papandreou, George's father. Otherwise Pasok could go to a messier vote among its party base, like the vote that allowed George Papandreou to prevail over Venizelos in November 2007.

There were unconfirmed reports earlier today that Papandreou was on his way to ask the president, Karolos Papoulias, to help form a government of national unity that would include the ruling socialists. An emergency cabinet meeting was ongoing on Thursday in parliament.

In Cannes Papandreou was prevailed upon to move up the date of the referendum to December 4. Originally it had been scheduled for January. "I believed it important that the Greek people have the chance to declare themselves on the [European] Council's decisions of October 26. It is their democratic right. And I believe the Greek people to be mature and wise... It isn't just about a progrmame. It's about whether or not we want to remain within the eurozone," he told reporters. Asked what he would do if the government lost the referendum, he said "The answer will be yes."

The language among the eurozone's leaders is reflecting the growing realisation that Greece could default and exit the euro, whereas the topic was taboo only a week ago. “We would like Greece to remain a member but we’re not saying Greece has to stay a member at all costs,” Eurogroup President Jean-Claude Juncker told Bloomberg. "The referendum will revolve around nothing less than the question: does Greece want to stay in the euro, yes or no?" asked German Chancellor Angela Merkel after meeting Papandreou in Cannes yesterday.

Full text of Finance Minister Evangelos Venizelos' statement:

"Greece's place within the euro is a historic achievement that cannot be put in doubt. This conquest of the Greek people cannot depend on the outcome of a referendum.

"The country has to feel safe and stable, and that is the first prerequisite for it to be safe and stable. Greek banks are entirely guaranteed as an integral part of the European banking system. That much was clear last night in Cannes.

"What is foremost is the disbursement of the sixth instalment [of the first bailout loan] as agreed by the Eurogroup on October 26, after a ten hour battle.

"The next step is the activation before the end of the month of the new support programme [bailout], which gives Greece another 130 billion euro and leads to a reduction of our public debt by about 100 billion euro. The completion of these procedures is a national imperative.

"I left hospital and went to Cannes because I consider that it was a matter of duty to the country. With the first hand view of the situation in Europe and internationally, I am obliged to tell the Greek people the full and simple truth: If we want to protect the country, we must, under conditions of national unity and political sobriety and consensus implement without delay the decision of the 26th of October. Now, as quickly as possible.

"Towards this end, the government's initiatives and the initiatives of the [socialist party's] parliamentary bloc of deputies are insufficient. Everything that is being said and done on a Europen and international level is equally pertinent to the opposition, particularly the main [conservative] opposition, which is the recipient of the message from Cannes. Its stance, were it a positive one, would act as a guarantee for the country's international credibility, but being negative hurts that credibility at an enormous cost to the Greek citizen.

"What is at stake is not the political dynamics at home or the future of particular individuals or parties, but the salvation and resitution of the country through the only feasible process, which is enshrined in the October 26 decision."

Other Developments

Socialist MP Eva Kaili, who asked Papandreou to form a government of national unity earlier this week announced today that she is not going to support the government in a vote of confidence tomorrow nor resign her seat, and effectively declared herself independent.

The Greek Political Crisis on PBS

On Tuesday, The New Athenian talked with PBS's Jeffrey Brown about the reasons behind Prime Minister George Papandreou's declaration of a referendum.

Transcript:

JEFFREY BROWN: A short time ago, I spoke with John Psaropoulos in Athens. He's a freelance reporter and writes the blog called The New Athenian.
John, welcome.

We said this was a surprise. Apparently it was even a surprise to people in the prime minister's cabinet and party. So what's known about why he suddenly decided to call for a referendum on the plan?
JOHN PSAROPOULOS, freelance reporter: At the moment, the prime minister hasn't explained his thinking, other than what he said in Parliament to his M.P.s yesterday, which was that the country had to move for on a democratic basis, it had to have hope for a better day after the austerity period was done, and that in order to achieve this he wanted his government to have the authority of a popular vote of approval for what was going to be the last phase, I presume, of the austerity measures that have been so painful up until this point.

Greek Government Tottering

Greek Prime Minister George Papandreou's days and even hours appeared to be numbered after a mutiny within his bloc of parliamentary deputies.

The ruling socialists were left with a majority of 2 MPs after the resignation on Tuesday of Milena Apostolaki from Pasok, calling the prime minister's idea of holding a referendum on a new, 100bn euro bailout package approved in Brussels last week "deeply divisive". She is holding onto her seat as an independent. Another two socialist MPs, Vaso Papandreou and Eva Kaili, have asked for a national unity government.

Eva Kaili also asked the PM to step down. Vaso Papandreou declared that "the country is threatened with imminent bankruptcy. I call upon the President of the Republic to call a meeting of party leaders with the object of forming a government of national salvation that would secure the aid package agreed on October 27, and then immediately take the government to national elections."