Greek Leader Calls Off Referendum on Bailout Plan

Greek Leader Calls Off Referendum on Bailout Plan

ATHENS — After a tumultuous day of political gamesmanship, Prime Minister George A. Papandreou called off his plan to hold a referendum on Greece’s new loan deal with the European Union and vowed to continue in office despite rumors he would resign and growing pressure from within his own party to do so.


In an address to his party’s central committee on Thursday evening, Mr. Papandreou said there was no need for a referendum now that the opposition New Democracy Party had said for the first time on Thursday that it would back the loan deal.

Trying to capitalize on what appeared to be a major political coup, the prime minister invited that party to become “co-negotiators” on the new deal and later said that talks on a unity government should begin immediately.

Addressing lawmakers late on Thursday, he also suggested that he would be willing to step aside so that others could form a unity government, but only if he wins a crucial confidence vote on Friday. “I am not clinging to my seat,” he said.

Earlier, the Greek opposition leader, Antonis Samaras, strongly rejected his overtures, accusing him of “deception” and paving the way for more political turmoil ahead.

Mr. Papandreou’s decision to call off the referendum follows three days of political volleyball that plunged world markets into turmoil, shook Europe to its foundations and drove enraged European leaders to issue an ultimatum Wednesday demanding that Greece decide once and for all if it wanted to remain a part of the European Union.

But after a day of political horse-trading on Thursday, the political storms and Byzantine maneuverings were looking less like momentous points of departure for Europe than hastily considered parliamentary maneuvers by a prime minister looking desperately for a way to shore up support with both his Socialist Party and the opposition — or to negotiate a graceful exit. As has happened so often before in the euro crisis, the fate of the entire European enterprise seemed to hinge on the political machinations of one of the union’s smallest members.

There were reports late Thursday that Mr. Papandreou has already agreed to step down following Friday’s confidence vote. Reuters reported that the finance minister, Evangelos Venizelos, told him during a cabinet meeting Thursday that he had to resign for the good of the party, and that the prime minister did not resist the idea.

He has offered no hint of that in public, saying he is simply trying to do what is best for Greece, which is keeping it in the European Union and the euro.

“The question was never about the referendum but about whether or not we are prepared to approve the decisions on Oct. 26,” he said, referring to the European Union debt deal, which wrote down Greece’s privately held debt by 50 percent, cutting Greece’s overall private and public sector debt burden by about 30 percent. “What is at stake is our position in the E.U.”

Shortly afterward, the finance minister, Evangelos Venizelos, confirmed the cancellation of the referendum and added that the government would now seek approval of the loan deal from a full majority of 180 in Parliament, rather than the simple majority of 151 that has supported previous measures.

But the political situation was far from settled. Mr. Papandreou must first survive a vote of confidence scheduled for Friday, the outcome of which is far from assured. If he survives that, he and Mr. Samaras will have to negotiate their deeply conflicting visions for the future.

Addressing lawmakers on Thursday evening, Mr. Samaras accused the prime minister of using Machiavellian tactics to cling to power. “He’s lying, he’s blackmailing, maneuvering inside Greece and beyond, all in order to hold on to his position,” Mr. Samaras said. He said he had asked the prime minister to resign. A source in New Democracy said the party wanted a caretaker, technocratic government to act as a stop gap until elections six weeks hence.

Before he and his lawmakers walked out of of Parliament Thursday night, Mr. Samaras accused the prime minister of having backed off his referendum plan only after European leaders “reproached him” in Cannes on Wednesday. “He is trying to convince us that he brought everything crashing down just to secure backing for an agreement that I had already supported on October 27,” Mr. Samaras said.

The decision to drop the referendum came after Mr. Samaras, switched course and decided to back the loan deal Analysts said Mr. Papandreou was fed up with Mr. Samaras sitting on the sidelines and scoring political points by opposing the deal and previous bailouts.

In spite of the political chaos, there was an element of déjà vu to Thursday’s political machinations. In an earlier crisis in June, Mr. Samaras had rejected Mr. Papandreou’s offers to form a coalition government with Mr. Papandreou at the helm. The two may be at the same impasse today.

“This negotiation will succeed or it will fail on the basis of personal antagonism,” said George Kirtsos, a political analyst and the owner of City Press, an Athens newspaper. “Since Samaras says part of the deal has to be that Papandreou will stand down, and Papandreou has not yet accepted it, it’s a kind of political poker and you don’t know how it will end.”

Still, he added, “Something has begun to change in the political system. New Democracy used to say no to an agreement reached at the summit, Papandreou used to say no to a transitional government.”

Speculation had been rife all day Thursday that Mr. Papandreou would abandon the referendum plan if the opposition would back the European deal. Before going into a brief emergency cabinet meeting, Mr. Papandreou suggested that he was prepared to walk away from the referendum proposal, saying that it “would not have been necessary if there had been consensus with the opposition.”

At first, Mr. Papandreou was said to have offered to resign before the confidence vote on Friday. By late afternoon, however, Greek news media reported during the cabinet meeting that he not only was refusing to resign but was in fact calling off the referendum. He did so later in the day.

Mr. Papandreou had said the referendum was aimed at broadening consensus, which meant forcing the opposition to back the loan deal. Analysts said that he may have been happy to drop the idea once that goal was accomplished on Thursday.

After the cabinet meeting ended, Mr. Papandreou spoke with Mr. Samaras by phone.

Even if he survives the coming hours or days in office, the prime minister is widely seen as having expended nearly all his political capital. Ever since Greece asked for a bailout from the European Union in April 2010, he has struggled to satisfy seemingly irreconcilable constituencies: the Greek electorate and Greece’s foreign lenders, who have insisted on tough austerity measures in exchange for aid, pushing Greek democracy to the breaking point.



source: nytimes.com