Photo: y ΠΑΣΟΚ, Flickr
Back-and-forth pandemonium still ensues in Greece right now.Now the future of PM George Papandreou’s career and government is in jeopardy, fueling uncertainty about the Greek bailout — and the stability of the eurozone.
First, let’s clarify what happened today, in chronological order:
– Finance Minister Evangelos Venizelos trashed Papandreou’s plan to hold a referendum on the terms of the Greek bailout decided upon last week.
– EU leaders made clear that this vote would have to be on whether or not Greece wanted to participate in the euro, and that the country would not receive troika bailout funds until the poll took place.
– Papandreou did a lot of backpedaling, and it became clear that the referendum probably wasn’t going to happen. He said he would go through with the confidence vote tomorrow, and that he would not resign. He also said the referendum would never have been about Europe.
– Then the PM spoke in front of his party in Parliament, telling them all that the referendum plan had been a “positive shock” he used to get consensus on the bailout’s necessary austerity measures from the opposition party New Democracy.
– New Democracy Leader Antonis Samaras alleged that he’d never agreed to Papandreou’s terms. He said Papandreou’s resignation was the contingency upon which his approval of the bailout rested.
At this point, Papandreou’s lost a lot of his political standing.
Not only did he deceive voters — most of which would have voted against the new austerity measures but for staying in the euro — by offering and then retracting his proposal for a referendum, he has severely lost credibility in his own government.
Two of his MPs have already said they might vote against him, which would compromise his majority in parliament.
To top it off, EU leaders just can’t trust him anymore even if they knew the referendum was just a ruse (there is nothing to suggest they did, but hypothetically they could have) after the accusations of lying from Samaras.
So here’s what we’re looking for tomorrow:
– We’ll be watching the big confidence vote at 4PM EST. Right now, Papandreou has emphasised that he must go ahead with that in order to secure the stability of Greece.
– It looks like Papandreou is on the outs — it’s just a matter of how and when. In a speech to parliament after the previously mentioned events unfolded, he said he was “not attached to any post,” suggesting that he could leave willingly under the right conditions.
– Greece appears to have two options: snap elections or a stable transition to a different, likely temporary coalition.
– Greece must agree to the terms of the second bailout quickly. Venizelos mentioned December 15 as a deadline for disbursement of the next tranche of aid from the first bailout, and that likely corresponds closely to the date at which the country would default without it. This will not happen without approval of the second bailout package and an agreement to accept whatever terms the EC/ECB/IMF troika doles out.
It’s crunch time for Greece, because one thing is certain: the pandemonium we witnessed today will be nothing compared to the catastrophe we’ll witness if Greece can’t make good on its promises.