Greek Prime Minister gains cabinet support for referendum on aid package; Papandreou summoned to a meeting by Merkel and Sarkozy
Greek Prime Minister George Papandreou won his cabinet’s backing for a referendum on the second Greek bailout package last night after a seven hour meeting. There were fears yesterday that his government may fall after two MPs quit his governing PASOK party and another called for a unity government to be formed, essentially erasing Papandreou’s governing majority.
Financial markets fell across Europe yesterday on the fear that a ‘No’ vote in the Greek referendum could lead to a disorderly Greek default and its exit from the eurozone. It is still unclear whether a referendum will even take place, with the Greek government needing to survive a confidence vote on Friday and gain approval from the Greek President Carolos Papoulias. The leader of the main opposition party, Antonis Samaras, also said that his party will make “every sacrifice to avert the holding of a referendum.” If a referendum does take place, it is unlikely to happen until January, although FTD quotes Greek Interior Minister Haris Kastanidis saying, “there is the possibility of holding [it]…in December.” Kastanidis also said that the referendum will only deal with the acceptance of the latest Greek rescue package, and not with Greece’s eurozone membership, according to El País.
Meanwhile, the plan to hold a referendum in Greece was negatively received by leaders around Europe, with most governments admitting they were completely surprised by the decision. Reports suggest that even the Greek Finance Minister Evangelos Venizelos had not been made aware of the plan in advance. In a statement French President Nicolas Sarkozy admitted that the announcement had “surprised all of Europe”, while Dutch Prime Minister Mark Rutte termed it a “very unfortunate decision”, adding that he would do everything possible to prevent the referendum from happening. As a result of his decision Papandreou has been called to a meeting with Sarkozy, German Chancellor Angela Merkel and other European leaders in Cannes today, on the side-lines of the G20 summit. According to Le Monde journalist Arnaud Leparmentier, Sarkozy will tell Papandreou that Greece will not get more money unless it complies with the latest agreement, and that if a referendum is to take place, it must happen as quickly as possible be on Greece’s eurozone membership.
NRC Handelsblad reports that, following the turmoil in Greece, the Dutch government has decided not to seek Dutch parliamentary approval for the latest EU summit deal and will simply sign off on it, fearing that it may not pass. Separately, the Greek government also replaced the leadership of the country’s military yesterday, although it denied this was in any way related to the current crisis.
Open Europe’s Raoul Ruparel appeared on ITV news discussing the Greek crisis and is quoted by Reuters, Business Insider and Public Service Europe.
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Italian government to hold emergency cabinet meeting tonight;
Italian employers and bankers tell Berlusconi to “stop the hemorrhage” or resign
Italian Prime Minister Silvio Berlusconi has called an emergency cabinet meeting tonight to endorse at least part of the new anti-crisis measures outlined in last week’s letter to EU leaders, so that he will be able to present some concrete achievements to his counterparts at the G20 summit. Il Sole 24 Ore reports that Berlusconi would like to adopt the measures through a new legislative decree, while Italian Economy Minister Giulio Tremonti is pushing to amend the existing austerity packages and put the amendments to a vote of confidence in the Italian parliament. Meanwhile, in a joint statement, Italy’s main employers’ association Confindustria and banking association ABI have urged Berlusconi to take decisive action immediately to “stop the hemorrhage” or resign. Separately, Roberto Antonione, a prominent MP from Berlusconi’s party yesterday said that: “Berlusconi must leave now, and the [ruling] majority must be extended to other centre-right parties”. Meanwhile, Italian borrowing costs continued to rise to record levels yesterday.
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Eurozone Comment roundup
In the Irish Times, Taoiseach Enda Kenny writes that: “Given our vastly better economic circumstances compared with Greece, default would mark us out as a country that ‘won’t’ rather than ‘can’t’ pay our debts, killing off foreign direct investment and resulting in even higher borrowing costs for the State and Irish businesses that would strangle recovery and lower living standards for a generation”.
An editorial in El País calls the Greek referendum “a colossal mistake”, while an editorial on the front page of Le Figaro notes, “Athens’ latest facetiousness has completed the discredit of Greece, which is making big steps towards eurozone exit.” An editorial in Le Monde argues, “So what’s got into George Papandreou? Does the Greek Prime Minister really want to prove right those who, in Germany and elsewhere, regret his country’s presence in the eurozone?” In FAZ, Holger Seltzner argues that in order for the future of the eurozone not to be tied to the outcome of the Greek referendum, it must prepare a Plan B in advance, which would see Greece leaving the euro. However in the same paper, Frank Schirrmacher argues that before panic and terror spirals out of control “it’s good to step back to see clearly what is happening here before our very eyes. It is the spectacle of a degeneration of the [democratic] values ??and beliefs that once seemed to be embodied in the idea of ??Europe”. FTD‘s editorial notes that while the referendum is a risky bet, “if Papandreou manages to convince the people with his arguments, the euro rescue would stand on steadier legs than it has up to this point.”
BBC: Mason Times: Charter Times: Finkelstein Times: Kaletsky Guardian: Leader Guardian: Elliott Telegraph: Editorial Telegraph: Hannan FT Editorial FT: Mahbubani WSJ: Bowring WSJ: Stelzer WSJ Review&Outlook CityAM: Pattison Independent: Leader Independent: Norman Independent: Prosser Irish Times: Kenny Irish Times: Beesley Irish Independent: Kyriakidou Mail: Lynn IHT: Erlanger Il Sole 24 Ore: Folli Il Sole 24 Ore: Ciampi Corriere della Sera: De Bortoli Le Figaro: Editorial Le Monde: Editorial Les Echos blogs: Seux Expansión: Castañeda El País: Editorial Coulisses de Bruxelles Kathimerini: Editorial FTD: Editorial FAZ: Seltzner FAZ: Schirrmacher FAZ: Kohler Sueddeutsche: Fried Welt: Siems Welt: Jost Bild: Gafron Knack: Van Cauwelaert
The EU’s Commissioner for Regional Policy, Johannes Hahn, has admitted in an interview with Austria’s ORF that “it can’t be excluded that there were investments in the past which weren’t very wise.”
The Irish Independent reports that the discovery of an accounting error means that Ireland’s national debt is €3.6bn less than previously thought.
The Times reports that Turkey is heading towards a major showdown in the eastern Mediterranean with Israel and the Republic of Cyprus as it steps up gas exploration in the increasingly tense region.
The Independent reports that 81 Conservative MPs who voted for a referendum on the UK’s EU membership last week have established new group the ’81 Group’ to counter the Government’s EU policy. The Telegraph reports that the group is planning “two or three” interventions in Parliament before Christmas, including an attempt to block the approval of the EU’s budget plans.
City AM reports that in an apparent change of policy, Chancellor George Osborne has privately written to senior bankers to say he now has serious doubts about whether a Financial Transaction Tax would work, even if introduced globally. In the FT, Archbishop of Canterbury Dr Rowan Williams argues in favour of the tax.
CityAM Times Telegraph FT FT: Williams
This post originally appeared on Open Europe.