Politicians in Greece were engaged in frantic negotiations to form a government of “national salvation” on Saturday [Editor’s note: and again yesterday] in a desperate bid to prevent debt-stricken Athens plunging into bankruptcy and possible exit from the EU.
As Europe’s leaders looked on nervously, embattled Greek Prime Minister George Papandreou visited Greek President Karalos Papoulias to ask to form a broad-based transitional administration that could navigate the country out of its worst crisis in modern times, following a week of high political drama.
“My aim is to immediately create a government of co--operation. A lack of consensus would worry our European partners over our country’s will to stay in the eurozone,” declared Papandreou, who hours earlier narrowly survived a vote of confidence in parliament.
In Greece’s bitterly divided political scene, forming such a government will not be easy. The battle lines between left and right, shaped historically by a brutal civil war and military dictatorship, remain deep. Papandreou’s offer was immediately shot down by the conservative main opposition party, which instead repeated calls for an election to be held immediately, a step described as a “disaster” by the socialist prime minister.
“We’ve not asked for any place in his government,” opposition New Democracy Party leader Antonis Samaras said in a TV address. “All we want is for Mr Papandreou to resign because he has become dangerous for the country. We insist on immediate elections.”
However, a range of smaller groups, including the populist far right Loas Party, struggled behind closed doors to overcome differences with the express purpose of creating a government that could secure broad approval for Greece’s latest EU-IMF sponsored aid package and avert financial catastrophe.
Once formed, the administration will have four months to pass crucial legislation, starting with the hard-bargained 130 billion euro (US$179 billion) debt deal agreed for the cash-strapped nation last week.
The specter of state coffers drying up by the middle of next month — schools and hospitals are already fast running out of essentials — has added to the urgency to have the bailout approved by parliament, despite widespread anger over the austerity measures the deal inevitably entails.
Frustrated with Greece’s protracted political disagreements and delays in implementing reforms, EU powerhouses France and Germany have threatened to withhold the next critical 8 billion euro aid installment until the loan agreement is formally ratified by Athens’ 300-seat parliament. In a major policy U-turn following the threat, Samaras announced last week that he would support the last bailout, which will also see 50 percent of the value of Greek bonds being written off.
“The decisions reached on Oct. 16 and the enforcement of steps that stem from it are a precondition of our remaining in the euro. These are critical times,” Papandreou said.
Elected in October 2009, the beleaguered prime minister was forced to create the new government under intense pressure from his increasingly disaffected socialist Pasok Party.
“There is so much rage we can’t even leave their homes any more,” one Pasok member of parliament (MP) said. “A lot of us ideologically were against the measures the IMF demanded that we pass, but there was nothing we could do. Now they call us traitors.”
Papandreou’s ill-fated decision to hold a referendum over the new debt deal saw party frictions explode into all-out warfare after European leaders reacted furiously to the idea and world markets nose-dived on fears of a “no” vote. He was forced into a humiliating retreat, shelving the proposal a few days later, but only after sustaining considerable damage to his reputation abroad.
The about-turn added to the electric mood in a country hit by strikes, protests and worsening recession.
“A new coalition government would be good because if we have more parties on board, we’ll have fewer strikes and protests,” said Petros Paleologus, an unemployed engineer. “But in Greece we’ve seen it all. None of us have faith in the political system. We are choosing to vote with our feet and leave.”
“Please write that all Greeks also know we are bankrupt, whatever anyone else says,” his 25-year-old friend, Ioannis, said. “If it goes on like this with no work and no prospect of work, there will be real trouble here. Things will get nasty. Maybe people will die.”
Since the debt crisis erupted in late 2009, most Greeks feel they have been on a train hurtling toward a cliff. The past week, the prospect of political instability and the rising tide of anger over belt-tightening measures that have seen ordinary Greeks’ purchasing power halved, has heightened those fears.
“We are not at the edge of the cliff, we are about to fall,” former socialist MP Giorgos Florides said. “At no other time over the past century has the country suffered such denigration and humiliation as this past week and the biggest humiliation was Europe changing its attitude towards us, openly questioning whether our place should be in the EU.”
With the crisis impacting on Europe, political analysts said it was crucial that a new government be formed soon.
Joining the growing ranks of pessimists, Greece’s pre-eminent observer of political affairs, professor Konstantinos Tsoukalas, said his greatest fear was that the situation had become “uncontrollable.”
“Everything is so fluid, so unpredictable. The whole game is open and quite dangerous,” he said. “I am scared of many things. Of Greece being pushed out of the EU under very inauspicious circumstances and what effect that might have, of possible violence erupting and the possible authoritarian reaction to it, and of the Greek political landscape, which is open to all possible conceivable developments. I can’t remember a time like this, in Greece or elsewhere.”
Papandreou was not the only European leader facing political crisis over the weekend. Italian Prime Minister Silvio Berlusconi returned from the G20 summit on Friday to be confronted by grim advisers telling him the hemorrhaging of his support in parliament could see him defeated in a budget vote today. He may yet decide to resign before then, but is determined to first call his dissident MPs to persuade them to stay on board.
If he can cling to power, he faces the humiliation of regular visits from IMF inspectors — hastily arranged in Cannes — checking on whether the leader, who likes to compare himself to former British prime minister Margaret Thatcher, can finally be persuaded to liberalize the economy and drag Italy off the front line in the eurozone crisis.
Many of the disillusioned in Berlusconi’s ranks are MPs who joined him early in his career, but have grown frustrated by his sex scandals and resent being passed over for promotion in favor of supporters recruited more recently to shore up Berlusconi’s flagging numbers in parliament.
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