Greek lawmakers geared up for a crucial confidence vote in the beleaguered Panhellenic Socialist Movement (PASOK) government yesterday, as both main parties floated plans to approve a massive European bailout and call new elections.
The political drama has horrified the indebted country’s European partners and overshadowed the G20 summit in the French resort of Cannes. The threat of a Greek default or exit from the eurozone has spooked global markets and worsened a European debt crisis that has already forced massive bailout deals for Greece, Ireland and Portugal.
Greek Prime Minister George Papandreou’s governing party has a tenuous majority of two in the 300-seat assembly, but at least one PASOK lawmaker has threatened not to back him.
Faced with a revolt in his own party and heavy international pressure, Papandreou on Thursday abandoned plans for a referendum on Greece’s latest international bailout agreement. The referendum proposal sparked a global crisis, as investors feared that rejection of the hard-fought debt relief plan would force a disorderly Greek default.
The new debt deal would give Greece a 130 billion euro (US$179 billion) rescue package — on top of the 110 billion euros it was granted a year ago. It would also see banks forgive Athens 50 percent of the money it owes them, about 100 billion euros. The goal is to reduce Greece’s debts to the point where the country is able to handle its finances without constant bailouts.
If the deal stalls, Greece will not get the next 8 billion euro installment of its loans and will probably go bankrupt before the year is out.
Papandreou has given no indication he plans to resign shortly, but he said on Thursday night he was not “glued to his seat.”
However, both his PASOK party and the opposition conservatives are talking about elections — though they differ strongly on the timing.
Senior PASOK lawmaker Christos Protopappas said yesterday that if the government wins the late-night confidence vote, it could then launch talks with the opposition conservatives on forming a caretaker administration to lead the country through the next few crucial months, when Greece must approve the bailout and thrash out debt writeoff details with banks.
Protopappas said elections could then be held in February or March next year.
“We need three or four months ... to rationalize the situation, restore calm to the country, get rid of that [sic] 100 billion euros in debt and build international credibility,” Protopappas told state NET radio.
“Then we can get back at each others’ throats for a month for the elections — at that point everyone will be able to wait for us,” he added.
The conservatives don’t want to wait. An angry New Democracy Party leader Antonis Samaras said on Thursday that Papandreou has to go now and he demanded elections within the next six weeks if possible.
“Mr Papandreou pretends that he didn’t understand what I told him,” he said. “I called on him to resign.”
Protopappas argued that holding early elections now would drive Greece to bankruptcy.