For Greek PM, political reality trumps fury of Sarkozy, Merkel
Greek PM Papandreou got the backing of his cabinet to hold a referendum on EU bailout terms. He meets today with France's Sarkozy and Germany's Merkel, who have said renegotiating is not an option.
Reports of the political death of Greek Prime Minister George Papandreou appear premature, despite widespread anger and confusion in Athens and elsewhere over his unexpected Oct. 31 call for a referendum on Greek bailout that panicked markets from Paris to Hong Kong.Skip to next paragraph
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Two years after revealing a colossal Greek debt and signing onto strict German-led austerity measures that are enormously unpopular in Greece, and despite assumptions among EU leaders that Greece will opt for the euro and the EU come what may – Papandreou has shown that political realities can, however awkwardly, trump the plans of even his European peers.
"Greece's government has steadily lost power [to the point that] they can't apply any decisions not made by the troika [the IMF, the EU, and the European Central Bank]," argues economist Jean-Paul Fitoussi of the Institute of Political Studies in Paris. "The government can't do anything. So Papandreou can either resign or ask the opinion of the people.... If a government has lost power after having been legitimately elected, it has no other choice."
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Armed with unanimous backing by his cabinet, the Greek prime minister is in France ahead of the G-20 meeting to explain his referendum decision, which shocked markets on fears of a possible disorderly Greek default and a domino effect in debt-ridden Europe.
But French and German officials said today that the terms of a 130 billion-euro Greek bailout cannot be renegotiated.
Papandreou told a cabinet meeting that ended last night at 3 a.m. that he would not impose any program by force, but rather with the consent of Greeks.
"This is our democratic contradition and we demand that it is also respected abroad," he said. In a text provided to agencies by his office, Papandreou argued with two initially dissenting ministers that a referendum "will be a clear mandate, and a clear message within and outside of Greece, about our European course and our participation in the euro."
Papandreou now faces a no-confidence vote on Friday with only a one- or two-vote margin in his ruling party majority in parliament.
French President Nicolas Sarkozy says that the bailout deal is “the only way to resolve Greek debt problems.” He was joined today by German Foreign Minister Guido Westerwelle, who told reporters in Istanbul that the “whole program” decided for Greece last week “cannot be placed back on the table."