Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Greek Prime Minister George Papandreou acknowledges applauding members of his party parliamentarians after addressing lawmakers in the parliament prior to a confidence vote in Athens Nov. 4, 2011. (YIORGOS KARAHALIS/YIORGOS KARAHALIS/REUTERS)
Greek Prime Minister George Papandreou acknowledges applauding members of his party parliamentarians after addressing lawmakers in the parliament prior to a confidence vote in Athens Nov. 4, 2011. (YIORGOS KARAHALIS/YIORGOS KARAHALIS/REUTERS)

Greece

Bailout deal inches closer as Papandreou survives confidence vote Add to ...

The Greek bailout deal moved a step closer to approval as the government survived a nail-biting confidence vote, following backroom negotiations about how to overhaul the country’s leadership.

Greek Prime Minister George Papandreou scored what may prove to be a Pyrrhic victory in the early hours of Saturday as he rallied his fractious party behind the controversial plan to stave off Greece’s creditors.

More related to this story

In order to gain the votes he needed for the 153-145 victory in parliament and prevent a snap election, Mr. Papandreou promised to dissolve his own government and consider the idea of somebody else taking his job.

His speech before the vote sounded almost maudlin as he looked back on the achievements of his career, defended his place in history and described his latest political manoeuvre as an act of self-sacrifice for the sake of restoring the Greek economy.

Mr. Papandreou said his party will now look for opposition members willing to form a new coalition government whose mandate will be to secure the new debt deal. “I’m even willing to discuss who will lead that government,” he said.

At another point, he added: “I never saw politics as a career, just a way to contribute to the public good.”

The Prime Minister said the new government will need 180 votes to pass the Brussels bailout agreement, without which the country could run dangerously short of cash and spark a series of global financial calamities.

Shopping around the opposition aisles for those extra votes is expected to require much humility on the part of the government, which lost credibility in Greece and abroad with its awkward handling of the crisis. Mr. Papandreou’s idea to hold a referendum on the debt agreement was swiftly scrapped on Thursday after an angry response from the market and European leaders.

Opposition leaders had called for Mr. Papandreou’s resignation and quick elections, and the biggest opposition party boycotted the confidence vote, but the Prime Minister argued that an interim government is necessary to shepherd Greece through the first steps of the financial rescue. It now appears that Mr. Papandreou hopes to delay elections until early spring, after European lenders pay the seventh instalment of bailout money as scheduled in February.

The instalment plan has already been delayed, however, by concerns about whether Greece will make good on its end of the bargain by tightening spending and pushing ahead with reforms. The most immediate concern is whether Greece can obtain the sixth instalment, of $11-billion, before going bankrupt next month. The money has been held up by European authorities until Greece commits itself to the bailout program, which remains unpopular on the street.

Economists say that until the markets see solid evidence of progress in Greece and Italy for structural reform, the whole euro zone will remain under pressure.

Much of Mr. Papandreou’s speech was devoted to selling the deal to his own people.

“This agreement gives us a good opportunity, maybe the last opportunity, to rebuild this country on solid foundations,” he said. “We cannot miss this opportunity or we will be held to account by history.”

Stefanos Manos, 71, a former Greek finance minister, said the drama eclipsed anything he has witnessed in three decades of politics. It’s not only the Greeks who lost confidence in their Prime Minister in recent weeks, Mr. Manos said; the international community wants to deal with new leadership. “[French President Nicolas]Sarkozy would refuse to sit in the same room with him,” Mr. Manos said of his former political ally.

The veteran politician said the Greek electorate does not want to accept the austerity needed to recover from the crisis, and the unpleasant result in the medium term may be expulsion from the euro zone.

“We will end up outside of Europe,” Mr. Manos said.

Such a result would be horrendous for Greece and the rest of Europe, said Yanis Varoufakis, a prominent economics professor at the University of Athens.

“The people on the street do not want to exit the euro,” he said. “They want a plan that works.”

Mr. Varoufakis predicted that Greece would continue to limp through political chaos until the euro “implodes,” or the European Union rescues all of its ailing economies with a grand bargain that would dwarf the Brussels agreement in scope. European banks must limit their demands on Greece, Ireland and other countries burdened by high deficits, he said; in return, those countries must promise to cut back in areas that won’t hurt growth, such as defence procurement, tax breaks for the wealthy and agriculture subsidies. He also suggested that Europe should invest in the worst-hit areas to promote a quick recovery.

“This is not a Greek crisis,” Mr. Varoufakis said. “It is a Greek calamity resulting from a structural flaw in the euro.”

In the know

Most popular videos »

Highlights

More from The Globe and Mail

Most popular