Eurozone Crisis: Greek Deal In Question As Finance Minister Breaks Ranks On Referendum
Greek Finance Minister Evangelos Venizelos has opened a rift in the country's government by publicly rejecting the notion of a referendum on euro membership.
George Papandreou, Greece's prime minister, met with his French and German counterparts on Wednesday night to discuss his highly controversial decision to put the eurozone's hard-fought agreement to bail out the stricken economy to the public vote.
With the entire eurozone rescue plan thrown into doubt by Papandreou's gamble - which he believes will add popular legitimacy to a package passed down from Europe - his fellow leaders issued an ultimatum: that the referendum must take place in December, and it must be an unambiguous choice between remaining in the euro or leaving it.
Speaking at a press conference last night, German Chancellor Angela Merkel said: “We would rather achieve a stabilisation of the euro with Greece than without Greece, but this goal of stabilising the euro is more important.”
Nicolas Sarkozy, the French President warned: “Our Greek friends must decide whether they want to continue the journey with us.”
Polls show that most Greeks oppose the bailout package, but wish to remain within the single currency.
With Germany and France also saying that the Greeks would receive no new bailout money until after the referendum, there are serious questions about the government's ability to service its existing debt and pay its employees. The country has said previously that its budget would be exhausted by mid-November.
Venizelos, who was taken to hospital with stomach pains on Tuesday, issued a statement on Thursday morning saying that the country's euro membership was not negotiable.
"Greece's position within the euro area is a historic conquest of the country that cannot be put in doubt," he said. "This acquis by the Greek people cannot depend on a referendum."
"I have a duty 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 seriousness and consensus, implement without any delay the decision of October 26. Now, as soon as possible."
Papandreou has called another emergency cabinet meeting on Thursday, ahead of a confidence vote tomorrow. His Pasok party has just a slim majority in parliament, following a number of defections across the past six months of crisis.
Venizelos, an old political rival of Papandreou who fought him for the leadership of the party four years ago, was ironically brought into the government in June to be a uniting force. As a political veteran and heavyweight, Venizelos was expected to quell rivalries inside Pasok and help push through tough austerity measures.
|@ HuffPostUK : POLL: 78% of respondents think Greece should leave the Eurozone. Have your say - Vote NOW http://t.co/5jrszuem|
Reuters is reporting that the Greek PM 'will stand down' if a coalition government is formed.
They quote an unnamed government source to support the story.
There is no other confirmation of that line as of yet.
"Samaras requests once again that Papandreou resigns, and that elections be held. He complains that Papandreou defames him in meetings with foreign leaders. He continues with a comparison to George Papandreou (the grandfather of the current premier), and the prevention of a vote in 1965. He contrasts this with 2011, where there are no elections because George Papandreou (the current premier) refuses them. “History repeats itself … as a farce.”
Harsh, brutal and perhaps unnecessary words. Given the vitriol, it’s very hard to see how these two politicians will agree on a government of national unity.
New Democracy is now withdrawing from the debate on the vote of confidence in the government.
Negotiations no doubt continue. But the terms are clear—the gauntlet has been thrown. George Papandreou will have to resign if he really wants a government of national unity."
Reuters is reporting that Antonis Samaras, the leader of the Greek opposition, has asked the PM to resign.
There is no doubt that there is a real sense of urgency in the room and a real sense of urgency from every individual that I have heard.
There was also an emphasis on the need for specific actions to come out of our discussion ... The eurozone has taken significant decisions.
The question that people have is are they willing to implement those decisions.
Evangelos Venizelos, the deputy leader of Papandreau's Pasok party, says that Greece "must say it is not holding the referendum" - as compared to his leader who just spent part of his speech defending the idea.
He also said that the bailout must be passed by at least 180 of the country's 300 MPs. That means Papandreau needs the support of the opposition to pass the plan.
Papandreou is still addressing his MPs:
"If the opposition is willing to negotiate then we are ready to ratify this deal and implement it."
He says that this deal represents "new political position for all of us". The opposition will form part of the negotiating party, but it is not clear whether he means it will be a full coalition.
He appeals to his party to vote in tomorrow's confidence vote.
Papandreou claims the confusion/discussion (delete as appropriate) around the referendum has been a "beneficial shock".
Papandreou: "I trust the wisdom and maturity of the Greek people and I trust it more than what is now called the political establishment.
"I believe deeply in democracy, and this is my principle and is well-rooted in our political party. In our political and cultural traditions. ... We believe in their opinion in one of the most important issues in recent days and of course our European partners recognise our right to go to a referendum ... Our partners would ideally not like to deal with national elections or a referendum."
Papandreou said that being part of the euro is 'taken for granted' in Greece.
Papandreou seems to be arguing that since turning down the bailout would be equivalent to leaving the Euro for at least ten years - he says was told this by the eurozone leaders - a referendum does not make sense.
"The question was not to have a referendum or not, it was how we safeguard the best possible implementation of the decisions that were made on 26 and 27 October."
"It was the failure of our society to implement this decision. ... It is revealing what has been talked about inside and outside Greece in the past couple of days. ... Our government is not afraid of asking the Greek people."
"But what alternatives did we have? The first one, which I think would be a catastrophe would be to go to a national election. ... I doubt we would get to the end of this election without a bankruptcy. The other alternative was to carry on with what we had started and get a consensus and prove to Europe that we could implement these decisions, and the third alternative would be to achieve a consensus for the decisions of the 26 and 27 October both before and after the elections, is something I have tried to achieve."
Papandreou has just told the Greek parliament that the October bailout deal was a 'landmark' for the country.
He said the deal had opened 'a new window to the future' and said the debt reduction would affect all of the people in Greece.
He has also talked about the prospect of a national unity government and said that the decision to hold a referendum or not was "our decision... a decision for the government".
"For the last two years we have waged a battle of Titanic proportions," he said.
"Our first duty being to fend off bankruptcy, to prevent the country collapsing."
The PM also said that the decisions made by the government have "saved the country" and added that its position inside the Euro was at stake.
"It's never happened before that a country has had 50% of its debt written off and is still complaining", the PM said.
|@ UN : Ban Ki-Moon to #G20 labour leaders: "Sustainable energy fuels jobs — jobs that recharge economies" http://t.co/M3PwcjG2|
|@ BBCNewsnight : Il Pleut. Greece has poured vinegar on the G20's frites - read @paulmasonnews latest blog from Cannes http://t.co/xX9Eglhf|
According to Reuters, Papandreou told his cabinet that he was not wedded to the idea of a referendum.
"I will be glad even if we don't go to a referendum, which was never a purpose in itself. I'm glad that all this discussion has at least brought a lot of people back to their senses," he is said to have told them.
It now seems that an agreement between the main political parties in Greece has led to the referendum being scrapped.
According to the Associated Press, an official from the office of prime minister Papandreou said opposition parties are expected to strike a deal that will negate the need for a public poll.
"There is no reason to have a referendum if there is consensus between the two large parties," the official said.
Sky News is reporting that the Greek eurozone bailout referendum has been scrapped.
Bookmakers William Hill have made Greece 1/6 to be the first country to leave the Eurozone, and make Italy and Portugal the 6/1 joint second favourites.
"The Eurozone is creaking at the seams, and a split could happen at any time," said Hill’s spokesman Graham Sharpe.
Odds in full: 1/6 Greece; 6/1 Italy & Portugal; 10/1 Spain; 12/1 Germany; 14/1 Ireland; 16/1 Belgium; 25/1 France.
More from Reuters:
|@ Reuters : FLASH: Greek referendum will not go ahead if major parties reach political agreement -PM office source http://t.co/dKKAa2EL|
Gordon Brown has made a rare public intervention.
He has told Reuters that the G20 needs to come up with a co-originated plan for growth.
"Either the world will come together and agree on a coordinated growth plan — or we will retreat into a new, more acrimonious protectionism," he says.
According to AFP Greek TV is reporting that Papandreou has insisted he will not be quitting.
And Reuters has quoted a source in his office as saying: "There is no resignation by the prime minister... There is no resignation by the cabinet."
Bill Gates-backed super geek Hans Rosling tracks countries' development using innovative data mapping tools. He also makes tortured jokes on international affairs.
|@ HansRosling : Greece lost 13 years of economic growth 1940-1953 http://t.co/rjS69Qq3 due to German occupation. Are they dragging euro down to retaliate?|
Mario Draghi may feel that his first week in charge at the European Central Bank has been overshadowed by forces outside of his control, but the new president has at least been able to distance himself marginally from his predecessor by cutting rates by 0.25% today.
Jean-Claude Trichet presided over a number of rate hikes into the teeth of an oncoming recession, insisting repeatedly at his regular press conferences that his mandate was to deal with rising inflation - despite the fact that he and the bank were being drawn into policymaking on the eurozone rescue plan.
This is a small reversal, but it is at least an acknowledgement that the ECB is aware that Europe has a growth problem.
Silvio Berlusconi might have a standing invitation to the G20, while George Papandreou only gets a summons, but the markets are reminding everyone that the Italian situation is far from stable. Yields on Italian debt were at euro-era highs of more than 6% yesterday and are still high today.
The FT's Tracy Alloway has this chart:
|@ tracyalloway : Have Italian bond yields passed the point of no return (6%) ? Citi chart: http://t.co/GYUhwyau|
His aides have denied it, but the rumours persist. George Papandreou is to meet with the president after an emergency cabinet meeting today. The BBC is reporting that he is preparing to offer the head of state a coalition government with Lucas Papademos, an economist and former president of the European Central Bank, at the helm of a technocratic cabinet.
Grumbles that the 24-hour news media has contributed to the continuing market panic on Greece by artificially creating deadlines and drama around technocratic decisions are pretty widespread, particularly in policy circles. Zerohedge, a popular market blog, is probably as culpable as many in spreading rumours, but here they are, pointing out that CNN is struggling to locate Cannes on a map.
There are a lot of confusing reports flying around the market about how many deputies George Papandreou really has behind him ahead of tomorrow's confidence vote. After his cabinet meeting on Tuesday night, he had - we understand - 152 members, with one earlier report of a defection proving to be not entirely true. However, with others - including the finance minister Evangelos Venizelos - saying that they do not back a referendum on staying in the euro, it could be that the official majority has been diluted.
There will be a lot of political calculating going on right now - hence the leaks coming out of Greece - as to whether pulling down the government from within is the best manoeuvre right now. The opposition New Democracy party is leading in the polls. That has to be taken into account as the dirt flies today.
The UK is prepared to pump more cash into the International Monetary Fund (IMF), Prime Minister David Cameron said this morning as he arrived in Cannes. The Tory-led coalition government has been very keen to distance itself from European Union bailouts and will not be participating in the scaled-up European Financial Stability Facility (EFSF).
However, as the IMF looks to build its reserves to potentially bail out damaged economies - i.e. the eurozone, the government has said that it will increase its commitment. Cameron is, then, prepared to help Greece - through Washington, not through Brussels. Read into that what you will.
|@ EU_Commission : Apologies to everyone, #EU #G20 pressconf will not take place as planned, we will try to find a slot this afternoon http://t.co/RT1sEVfa|
Speaking at today's G20, Bill Gates, once the world's richest man, is to propose a number of ways to help the global poor, including levies on financial transactions - a so-called "Robin Hood" tax - as well as duties on tobacco, shipping and aviation fuel.
Nicolas Sarkozy tasked Gates with finding innovative ways to overcome the funding gap for tackling emerging world problems left by the global economic crisis. At the Gleneagles G8 summit in 2005, world leaders committed to set aside 0.7% of their gross domestic product for development, but many have failed to live up to their promises.
Since then, Gates has won plaudits for his reinvention of the philanthropic model through his eponymous foundation.
On his blog before the meeting began, Gates argued that development assistance - which has increasingly been attacked as ineffective in truly driving change in poor countries - has delivered real examples of growth, highlighting Turkey, South Korea and China as countries that benefitted from external intervention.
Brendan Cox, director of policy at Save the Children, said that "Bill Gates' report marks the first time the G20 will address development finance comprehensively. But at a time when thousands of children are dying every day simply because they can’t see a doctor or get enough to eat, discussing the report simply isn't good enough.
"The report sets out a series of realistic and affordable actions that over time could save millions of children’s lives. All G20 leaders must commit to putting in place its recommendations and to review their progress when they meet next in Mexico. They must not simply nod politely and move onto the next agenda item."