Greek Leader Survives Vote, Bolstering Deal on European Debt

Greek civilian walks pass flames burning in Athens amid unrest aimed at stopping the imposition of further austerity measures designed to stave off the capitalist economic crisis. Parliament voted in favor of further measures against workers and youth., a photo by Pan-African News Wire File Photos on Flickr.

November 4, 2011

Greek Leader Survives Vote, Bolstering Deal on Europe Debt

By RACHEL DONADIO
New York Times

ATHENS — Prime Minister George Papandreou of Greece survived a crucial confidence vote in the Greek Parliament early on Saturday, a vote that signaled approval of the comprehensive deal reached by European leaders last week to stabilize the euro and to help Greece avoid defaulting on its debt.

Mr. Papandreou pledged to form a unity government with a broader consensus, regardless of whether he would lead it.

The moves ended a frenetic week that began with Mr. Papandreou’s surprise call for a referendum on Greece’s new debt agreement with the European Union, which threw financial markets into disarray and even threatened to spread the financial contagion to Italy. He was then forced to back away in a humiliating about-face and saw his domestic support crumble rapidly, even within his own party.

In the 300-member Parliament, Mr. Papandreou received 153 votes. His total included the support of all members of his Socialist Party, known as Pasok, and an independent; several members who had said they would oppose the prime minister ultimately rallied to support him. Mr. Papandreou had widely been expected to step down after the confidence vote, but he said early Saturday that he would explore the composition of a transitional unity government in a meeting with President Karolos Papoulias later in the day. Finance Minister Evangelos Venizelos said the interim government would govern until the end of February, with early elections expected in March.

The confidence vote was essentially cast as a vote on the debt agreement reached with European leaders in Brussels last week, and its passage suggested that Parliament was likely to formally approve the deal. It also appeared to clear the way for Greece to receive the next installment of aid, $11 billion, next month; Greek officials have said that without the additional funds, the country would run out of money to cover expenses by mid-December.

Had Mr. Papandreou lost the vote, his government would have been brought down, throwing the debt agreement into jeopardy and possibly leading to a Greek default and its departure from the euro zone, the 17 nations in the European Union that use the currency. The prime minister’s volatile moves during the week appear to have succeeded in averting those events, at least for now.

But the vote did not resolve the continuing political drama in Greece, including what will be the composition of the next government. Amid growing social unrest in a country whose economy has been decimated by the debt crisis and austerity measures, a new government will have the difficult task of getting formal approval of the debt deal and carrying out the structural changes to which Greece has already pledged itself, including dismissing government workers.

A few hours before the vote, Mr. Papandreou offered a final appeal to Greek lawmakers, declaring his willingness to open immediate talks on a coalition government and to step aside for the good of the country. “The last thing that interests me is my seat,” he said. While the prospect of Greece’s leaving the euro zone, however remote, has been set aside for now, the country is likely to face a caretaker government increasingly seen as beholden to the European Union and the International Monetary Fund, Greece’s foreign lenders.

Mr. Papandreou told the lawmakers that he had viewed a referendum as a form of “direct democracy,” a nod to protesters who have been calling for a greater say in their country’s future amid a growing sense that Greece was no longer in control of its own affairs.

The idea of a referendum not only caused market turmoil, but it also infuriated European leaders, who gave Mr. Papandreou a serious dressing down in Cannes, France, on Wednesday. It also provided political leverage for the prime minister; Mr. Papandreou dropped the idea only after the conservative opposition, the New Democracy Party, altered its position and said it would support the debt deal.

The New Democracy leader, Antonis Samaras, who has said he would not join a coalition government if it was led by Mr. Panapndreou, repeated his demand for early elections after the confidence vote.

On Thursday, he accused Mr. Papandreou of deception and “blackmailing” the Greek people by proposing a referendum.

Mr. Samaras said that the government had rejected his party’s proposals “in their entirety” and so there was no room for consensus. “Mr. Papandreou did not accept our proposals,” he said. “The masks have fallen. The only solution is elections.” The pressure from within Mr. Papandreou’s party had also been intense. The education minister, Anna Diamantopoulou, part of a reform-minded wing in the party that had been critical of Mr. Papandreou’s difficulties in carrying out reforms, said before the confidence vote that a combination of factors had led to calls for a unity government.

“I think he has felt a huge pressure, particularly from his parliamentary group, and this is because members of the group themselves had a huge social pressure,” she said of the prime minister in a telephone interview. “There is a need for a government that has the support of all political parties. This is a desire on the part of Europe as well.”

The Greek Parliament must formally consider and vote on the latest debt deal with Europe. Among other things, it calls for private banks to take a 50 percent writedown on the face value of some of their Greek debt.

“What people are forgetting because of the political drama going on is what brought Papandreou down — if he does fall — are things that are still very strong,” said Nikos Kostandaras, the managing editor of the center-right daily newspaper Kathimerini. “The measures are very difficult to enforce and the public reaction is very, very dynamic and whoever is in the next government or if this government continues will have a much, much harder time.”

Many Greeks believe Mr. Papandreou lost credibility, both by calling for the referendum and then by backing down.

The political crisis has raised the profile of the finance minister, Mr. Venizelos, who is seen as a political rival of Mr. Papandreou as much as an ally. There was speculation on Friday that Mr. Venizelos might even succeed Mr. Papandreou as prime minister.

On Friday, Mr. Venizelos spoke on the telephone with some of the key players behind the debt deal, reassuring them that after the confidence vote, the Greek government would be able to unite behind the complete package to stabilize the euro.

Mr. Papandreou came into power in Oct. 2009 and has spent his entire tenure coping with the spiraling debt crisis, which began when his government revealed in Dec. 2009 that its budget deficit figures had been wildly understated by the previous New Democracy government.

While upset with the austerity measures to which the government has agreed in return for aid to continue paying the country’s debts, many Greeks say that changing leaders would make little difference. “It’s the same politicians, the same austerity measures, the same German politicians,” said Georgia Brezati, a shop owner in downtown Athens, expressing a widely held view that Greece was now a protectorate of the European Union, and in particular Germany.

“Everyone in this position in this time would have the same problem,” she added.

Niki Kitsantonis contributed reporting from Athens.