The European debt crisis has wrecked the political careers of the leaders of Ireland, Portugal and Spain. Greek Prime Minister George Papandreou may be the next victim.
After mass strikes and violent protests paralyzed Athens on Wednesday, Mr. Papandreou said he would shuffle his cabinet, form a new government on Thursday and demand a vote of confidence in a desperate effort to gain enough cross-party political support to launch a new round of deep spending cuts.
Earlier in the day, he reportedly offered to sacrifice his finance minister, George Papaconstantinou, who has become the lightning rod for public anger over the austerity program insisted upon by the European Union, the International Monetary Fund and the European Central Bank. In exchange for crunching the budget deficit, the "Troika," as they are known, would approve fresh bailout loans aimed at preventing the effectively insolvent country from defaulting on its sovereign bonds.
Mr. Papandreou announced his commitment to form a new government on Greek television Wednesday night. It came after a flurry of reports that he would step down to stem a revolt within his own PASOK party, and buy peace with the opposition parties, over the approval and launch of an aggressive austerity program.
In his TV address, he vowed to continue with the economic reforms. "This is the road of duty, together with PASOK's parliamentary group, its members, and the Greek people," he said.
While the Prime Minister emerged from the 2009 election with a six-seat parliamentary majority, at least one PASOK member defected this week and more were set to follow, making it unlikely that Mr. Papandreou would risk political mayhem by trying to tough it out.
Wednesday's protests in Athens were the most violent since last spring, when a bank branch was firebombed, killing three bank employees.
Police estimated that as many as 40,000 protestors jammed central Athens. The city has been under near constant siege since late May, when frustration over a lack of jobs and social spending reductions erupted, creating mayhem and scaring away tourists.
The Prime Minister is seen as politically astute but financially naive at a time when his country - saddled with the highest debt load in the European Union and a 16.2-per-cent unemployment rate - needs economic salvation.
Mr. Papandreou has been criticized by the EU and the IMF for moving too slowly in implementing spending reductions and economic reforms, such as the privatizations of bloated, state-controlled companies.
In his new book Greece's Odious Debt, author Jason Manolopoulos noted that Mr. Papandreou's government was still considering bumping up pension entitlements as late as December, 2009, more than a full year after the global financial crisis plunged the Western world into a bank-killing recession.
In May of 2010, the country was spared from financial oblivion by a €110-billion bailout package from the EU and the IMF, but the amount proved to be inadequate. The wealthy EU governments, the IMF and the ECB are now scrambling to cobble together a second rescue, worth as much as €60-billion, but are in open disagreement about whether private bondholders should be forced to take losses to cram down Greek's unsustainable debt load.
Mr. Papandreou's resignation, if it comes in a lost vote of confidence, would make him yet another casualty of opposition party and voter rage in the European countries worst hit by the debt crisis.
Earlier this month, Portugal's ruling Socialist Party was defeated in the general elections. Ireland's Fianna Fail party suffered a crushing defeat in February and, last month, the centre-left government of Spanish Prime Minister Jose Luis Rodriguez Zapatero took a beating in regional and local elections. Mr. Zapatero is under pressure to resign but has said he will not step down before March, when the next election is to be held.Report Typo/Error