September 30, 2022

Defections Shake Greek Coalition

Amid some of the most violent demonstrations in Greece in months, and after 14 hours of debate, the coalition approved the measures, 153 to 128. Several governing lawmakers broke ranks to oppose them and 18 members voted present, the equivalent of a blank vote, including 15 from the smallest coalition party, Democratic Left, which opposes the package. There was one abstention.

But the Socialists, whose leadership has staked its credibility on supporting the politically toxic austerity program despite opposition from its political base, were hit hardest. On Thursday, a seventh member of the governing coalition’s Socialist Pasok Party defected, after six others were expelled from party for opposing the measures. One from the conservative New Democracy party was also expelled.

The measures — including sharp cuts to pensions, salaries and social services, as well as tax increases and increases in the retirement age to 67 from 65 — are expected, but not guaranteed, to persuade Greece’s foreign creditors to unlock around $40 billion in aid that the country needs to meet expenses.

A vote on the 2013 budget to activate the austerity package is expected late Sunday.

In presenting the austerity measures, which total $23 billion over four years, to Parliament, Mr. Samaras acknowledged that the new cuts to pensions and salaries were “unfair,” but added that Greece was bound by the terms of its agreement with creditors.

“A lot of what we’re voting on today are measures we should have taken a long time ago,” he said, adding that they would be “the last, the last” such cuts. Future “adjustments,” he said, would come from a crackdown on tax evasion and public-sector waste.

Mr. Samaras, however, is the third prime minister to promise the “last cuts” since Greece asked for a foreign bailout in 2010. The deep cuts, which have helped Greece’s economy shrink 25 percent in recent years, are undermining the country’s social and political stability — and the government’s ability to carry out the structural changes.

“You can’t rebuild institutions when you’ve cut down the salaries of people who work for them,” said Alexis Papahelas, the managing editor of the Kathimerini daily. “That’s the big problem the government and the country are facing.”

On the eve of the vote, nearly 50 employees of Greece’s central bank resigned to protest the deep cuts to public-sector salaries, while on Wednesday, Greece’s Supreme Court ruled that cuts of up to 30 percent in judge’s salaries would violate the Constitution.

Parliamentary staff also threatened Wednesday to resign over their salary cuts, leading Mr. Samaras to consider invoking executive authority to force them to stay on the job, according to a government official not authorized to speak publicly.

Greece’s troika of foreign lenders — the European Commission, European Central Bank and International Monetary Fund — have demanded that Greece reduce its budget deficit in exchange for more aid.

Yet few believe that the measures will help improve the country’s economic health.

“Telling a whole people that they have to commit collective suicide to save the debt is not a policy,” Zoe Kostantopoulou, a member of Parliament from the leftist Syriza opposition party, said in an interview, expressing a sentiment growing across the political spectrum.

“The reason why we’ve seen the economy implode much more rapidly than thought is that they grossly underestimated the impact that fiscal austerity of this magnitude would have on the Greek economy,” said Simon Tilford, the chief economist at the Center for European Reform in London. “Additional austerity is going to compound that weakness.”

Mr. Tilford added that the slump in the economy was also making it harder for Greece to meet the troika’s demands to reduce a mountain of debt. “The whole strategy for Greece has failed,” Mr. Tilford said. “It’s led to collapse in the Greek economy and the ballooning of debt so it’s an abject failure.”

Stella Dimitrakopolou, a 29-year-old graphic designer who donned a surgical mask as protection against tear gas in Wednesday’s demonstration, agreed.

“These measures are inhumane,” Ms. Dimitrakopolou said. “The young generation has no future, and older people have no money and the measures do not help society economically.”

Niki Kitsantonis contributed reporting.

Article source: http://www.nytimes.com/2012/11/09/world/europe/defections-shake-greek-coalition.html?partner=rss&emc=rss

Fragile Coalition in Greece Narrowly Backs Austerity

After 14 hours of debate, the three-party coalition of Prime Minister Antonis Samaras held together to pass the measures, 153 to 128, after several lawmakers broke ranks. Eighteen members voted present, the equivalent of a blank vote, including 15 from the smallest coalition party, Democratic Left, which opposes the measures. There was one abstention.

After the vote, six lawmakers were expelled from the governing coalition’s Socialist Pasok party and one from the conservative New Democracy party

The measures — including sharp cuts to pensions, salaries and social services, as well as tax increases and increases in the retirement age to 67 from 65 — are expected, but not guaranteed, to persuade Greece’s foreign creditors to unlock 31 billion euros in aid, or about $40 billion, that the country needs to meet expenses.

A vote on the 2013 budget to activate the austerity package is expected late Sunday.

In presenting the austerity measures, which total 17 billion euros, to Parliament, Mr. Samaras acknowledged that the new cuts to pensions and salaries were “unfair,” but added that Greece was bound by the terms of its agreement with creditors.

“A lot of what we’re voting on today are measures we should have taken a long time ago,” he said, adding that they would be “the last, the last” such cuts. Future “adjustments,” he said, would come from a crackdown on tax evasion and public sector waste.

Mr. Samaras, however, is the third prime minister to promise the “last cuts” since Greece asked for a foreign bailout in 2010. The deep cuts, which have helped Greece’s economy shrink 25 percent in recent years, are undermining the country’s social and political stability — and the government’s ability to carry out the structural changes.

“You can’t rebuild institutions when you’ve cut down the salaries of people who work for them,” said Alexis Papahelas, the managing editor of the Kathimerini daily. “That’s the big problem the government and the country are facing.”

On the eve of the vote, nearly 50 employees of Greece’s central bank resigned to protest the deep cuts to public sector salaries, while on Wednesday, Greece’s Supreme Court ruled that cuts of up to 30 percent in judge’s salaries would violate the constitution.

Parliamentary staff also threatened Wednesday to resign over their salary cuts, leading Mr. Samaras to consider invoking executive authority to force them to stay on the job, according to a government official not authorized to speak publicly.

Greece’s troika of foreign lenders — the European Commission, European Central Bank and International Monetary Fund — have demanded that Greece reduce its budget deficit in exchange for more aid.

Yet few believe that the measures will help improve the country’s economic health.

“Telling a whole people that they have to commit collective suicide to save the debt is not a policy,” Zoe Kostantopoulou, a member of Parliament from the leftist Syriza opposition party, said in an interview, expressing a sentiment growing across the political spectrum.

“The reason why we’ve seen the economy implode much more rapidly than thought is that they grossly underestimated the impact that fiscal austerity of this magnitude would have on the Greek economy,” said Simon Tilford, the chief economist at the Center for European Reform in London. “Additional austerity is going to compound that weakness.”

He added that the slump in the economy was also making it harder for Greece to meet the troika’s demands to reduce a mountain of debt. “The whole strategy for Greece has failed,” Mr. Tilford said. “It’s led to collapse in the Greek economy and the ballooning of debt so it’s an abject failure.”.

Stella Dimitrakopolou, a 29-year-old graphic designer who donned a surgical mask to ward off tear gas in Wednesday’s demonstration, agreed.

“These measures are inhumane,” she said. “The young generation has no future, and older people have no money and the measures do not help society economically.”

Niki Kitsantonis contributed reporting

Article source: http://www.nytimes.com/2012/11/08/world/europe/greece-austerity-vote.html?partner=rss&emc=rss

IHT Rendezvous: Greek Elections: Niki Kitsantonis Answers Readers’ Questions

Supporters of the extreme right Golden Dawn party sit below Greek flags during an election campaign rally in Athens on Monday, June 11.John Kolesidis/ReutersSupporters of the extreme right Golden Dawn party sit below Greek flags during an election campaign rally in Athens on Monday, June 11.

ATHENS — Greece is just days away from a rerun of the elections that failed to give any single party (or group of parties) enough power to form a government. How Greece, the birthplace of Western democracy, votes may have fateful consequences both for this country and for the dozens of countries who use the euro or belong to the European Union, the most ambitious project of free states and free people that this Continent has ever known.

With those historic stakes in mind, you sent us your questions about Sunday’s elections and about Greece as a society and a polity. I’ve done my best to answer those questions here on Rendezvous. Feel free to ask more questions or leave comments in reply to my answers.

And come back on Sunday and tell us what you think of the final election results. In the meantime, you can follow me on Twitter at @NikiKitsantonis.

Thank you for your questions.

David Levner of New York said he saw four possible chain of events based on who wins:

1: Syriza wins, a financial crisis ensues, and Greece stops using the euro.
2: New Democracy and Pasok form a coalition, renegotiate the bailout terms slightly, and Greece continues muddling through.
3: New Democracy and Pasok form a coalition, renegotiate the bailout terms slightly, but Greece runs out of money anyway.
4: The elections are inconclusive again, a financial crisis ensues, and Greece stops using the euro.

Only two things are certain: there is no single dominant political force in Greece and Greece is running out of money.

The fact that no party has a clear lead over its rivals, according to the latest opinion polls, suggests that whoever wins will have to form a coalition, as they were obliged (but failed) to do following last month’s polls. This time, however, the stakes are higher. Not only are the elections being viewed as a referendum on Greece staying in the euro, but state coffers will be empty in July without foreign support, increasing the pressure on politicians to form a government.

In the worst-case scenario, if leaders fail to form a coalition, the president will likely cobble together an ecumenical government, with all parties entering Parliament. It would be a unstable administration but better than the alternative — a void in governance — and could tide Greece through the summer, securing crucial funding. The staying power of such a government would be limited, though, and a third round of elections in the fall would probably be unavoidable.

The hope is that political leaders will rise to the occasion and avert such an outcome, but for this to happen they must forge alliances that they were not willing to forge a few weeks ago.

For the leftist Syriza, which has been riding an anti-austerity wave and has been neck-and-neck with the conservatives in most polls, this will not be easy. The communists have rejected Syriza’s overtures and the other moderate leftist party, Democratic Left, refuses to work with Syriza if it rejects the debt deal outright, which jeopardizes Greece’s place in the euro.

Conservative New Democracy came in first last time, and it has strengthened by joining with the liberal Democratic Alliance and attracting MPs from small right-wing parties. It could form an alliance with Socialist Pasok. These are the two old-guard parties that signed the debt deal. Together, they could attempt to renegotiate some terms with creditors, especially with the euro in the balance.

(Most Greek parties have interpreted the €100-billion loan extended to Spanish banks over the weekend as a sign that Athens could negotiate more favorable terms to its bailout.)

But in view of Pasok’s dwindling support, such a coalition might need the backing of another party, possibly Democratic Left, which last month refused to join a coalition excluding Syriza. If it were to shift its position on Syriza, Democratic Left could be the kingmaker in a new European-focused government that accepts the current debt deal as a basis for renegotiation.

Alec Mally in Athens asks:
Why do the Greeks feel they are above the IMF/Troika policy conditionality required in their bailouts? Portugal is hunkering down. So what is it in the Greek media environment and political culture that has convinced the Greeks that they are somehow “above” the requirements imposed by the Troika and thus able to pick and choose which structural reforms of their decrepit economy and public sector they would implement?

After two years of austerity, most Greeks are running out of patience with reforms, not least because the measures have not had the desired effect of propping up the economy. Due to their failure to make structural reform, Greek politicians fell back on the easy option of austerity — across-the-board cuts to wages and pensions and tax hikes — which provided quick revenue but decimated households and businesses and deepened the recession. This poses a challenge for politicians trying to impose further austerity measures or bring deeper reforms to the system.

Another major problem is the inability of authorities to crack down on widespread tax evasion, worth an estimated €45 billion per year, ranging from the simplest daily transactions (the non-issuance of receipts) to the workings of big businesses.

Lack of political will for reform, always an issue, has deepened ahead of the elections. But political will was not the only barrier faced by the troika. The absence of a functioning public administration to enforce rules was also a key obstacle. Troika officials have indicated that the Greek system is more resistant to change than they had anticipated.

Recently there has been talk, both in Greece and in Europe, about balancing austerity with growth-oriented reform but it has come a bit late for Greece which is in its fifth straight year of recession. Portugal has been more successful in implementing reform but is in its sixth quarter of recession and the measures attached to its bailout were not as harsh as those imposed on Greece. Furthermore, Portugal, like Spain, which has just received €100 billion to prop up its banks, does not have the same debt sustainability problem as Greece.

Mary Cattermole, from San Gregorio, California, said:
I heard that Greek politicians control all jobs through patronage. No one wants what is good for all, only what is good for them and their friends. Euro or no euro, how can you change this culture of corruption?

An entrenched votes-for-favors culture is widely blamed for creating the bloated state that contributed to Greece’s huge debt. However this is gradually changing for two key reasons — first, politicians no longer have the ability to offer special treatment (be it jobs in the public sector or other privileges) due to cutbacks imposed by the troika — which is awaiting the formation of a new Greek government to discuss an additional 11 billion euros in cuts over the next two years. Second, a growing number of Greeks object to this system which they blame for the country’s economic collapse.

Surveys show that a government job is no longer the ambition of most Greek college students, many of whom are keen to pursue their careers abroad.

Since the crisis took hold in Greece, several politicians have criticized the job-for-votes system and corruption in public life, including former socialist Prime Minister George Papandreou who repeatedly highlighted graft as the country’s major problem, and former deputy premier Theodoros Pangalos who stated outright that Greeks use their vote to secure a government job. Until recently those drawing attention to this problem were dismissed as traitors or hypocrites.

A woman kisses the head of Alexis Tsipras, the leader of Syriza, or Radical Left Coalition, during a pre-election rally in Elefsina, Greece.Petros Giannakouris/Associated PressA woman kisses the head of Alexis Tsipras, the leader of Syriza or Radical Left Coalition during a pre-election rally in Elefsina, Greece.

A reader who identifies herself as Anna from the heartland had a number of questions:
Is it true that the shipping industry is exempt from taxation? If this is true, why are they exempt? Are there other industries that are exempt from taxation and why? Is it true that the port of Pireaus was sold to and is currently owned by China? Does China pay taxes to Greece for its use?

Greece’s shipping sector, one of the country’s few healthy ones, accounts for about seven percent of GDP and eight percent of the world’s fleets with more than 3,000 vessels. It pays a discounted tax rate but is not exempt. Shipping companies pay tonnage and port taxes but are exempt from income tax and tax on profits. There has not been much talk of imposing additional taxes on shipping firms, mostly out of fear that they would join the majority of large Greek companies in relocating elsewhere. Authorities are loath to alienate shippers as they are the country’s largest foreign exchange earners, bringing in €13 billion in foreign exchange in 2010, and major investors in real estate, banking, tourism and the media.

The involvement of the Chinese firm Cosco in the country’s main port of Piraeus, near Athens, is one of the few examples of a foreign investment in a state-owned asset in Greece to take off, despite political and union opposition. Cosco has signed a 35-year lease to operate one of the two cargo terminals at the port, and build a third, and is subject to the same tax and customs charges as other shipping companies.

Apart from shipping, there are few other sectors that enjoy favorable tax treatment. Tourism, one of Greece’s largest industries, accounts for a fifth of GDP and one in five jobs, and benefited from a reduction of the value added tax on accommodation (to 6.5 percent from 13 percent) in 2010 but the increase in VAT on food served at restaurants and hotels (to 23 percent from 13 percent) last year as part of troika-imposed reforms has offset any benefits from the earlier tax break. Anti-austerity rallies that turn violent and other bad press have led to a drop in foreign visitors which, tourist professionals say, could finish them off.

Alan from Paris asks:
Is there any hope that after the new election we will see a relaxation of the anti-competitive regulation strangling growth in Greece? The limits on the hours businesses can open, etc?

The troika has had little success in liberalizing dozens of so-called “closed professions,” ranging from taxi drivers to pharmacists, that are protected by guilds that obstruct newcomers and have strenuously opposed reforms. Economists had estimated that opening these sectors could increase GDP by 10 percent in five years. But, with the deeper-than-expected recession (taxi drivers have seen a major slump in business, truck drivers have fewer deliveries, etc.), some argue that even if these areas were liberalized, new entrants would have few prospects.

Opening hours for businesses vary in different areas, with shops in tourist areas often opening all day. Talks on launching trade on Sundays and Monday and Wednesday afternoons, when many Greek businesses traditionally close, failed to progress due to opposition by employers’ unions. The biggest problem is that reduced consumer power has crippled business activity, a problem that longer opening hours would likely not solve.

Reminore in New York asks:
What is the possibility of a military coup of “national salvation”?

There has been isolated speculation about such a prospect but no indication that this could happen. Abhorrence to the military dictatorship of the late ’60s and early ’70s is embedded in the psyche of Greeks, even those who did not experience the repressive regime firsthand, so it is almost inconceivable that such action would be taken. There is no social or political foundation to support it. In the event that the current social discontent swells to the point of civil unrest — in the case of a euro exit and subsequent shortages of basic imported goods such as fuel, food and medicine, for example — it is likely that the political class would pull together rather than leave a void in governance that could provoke unpredictable developments.

AK from NYC asks:
I am currently visiting friends in Greece. The impression I get is one of resigned exasperation: they don’t want the leftists or the extreme right to win, but they also see no future in the current path. I’ve heard from many that, under the current (EU/IMF-dictated) austerity path, they are bound to lose their jobs and homes within the next year or two. They feel they have nothing to lose by voting for those that will likely take them out of the euro and possibly the E.U., since the current path is (as they see it) guaranteed disaster. Very depressing, really.

It is true that there is a general sense of exasperation among many Greeks. Living standards have been slashed, most who still have a job work more hours for less pay, and always in fear of layoffs, hopes for a decent pension are gone and many are struggling to keep up the mortgage payments on their homes. The sense among many is that the rescue funding is going toward paying interest on Greece’s rescue loans and to supporting banks. Similar exasperation, and anti-austerity protests, have been seen in other countries across the world, not just those obliged to seek foreign bailouts, with the Occupy movement expressing some of this frustration and, often, solidarity with Greeks.

In Greece, the resentment has been reflected to a certain extent in opinion polls showing support for parties at the extremes of the political spectrum, although support for the far-right has ebbed recently. But opinion polls also consistently show that 8 in 10 Greeks want to stay in the euro. Surveys also indicate that a majority of Greeks want a coalition government as they do not have faith in one particular party to lead them out of the crisis. A significant majority, it seems, will vote for the pro-bailout conservatives, who appear to be making a comeback, and for leftist Syriza, which has indicated it will reject the bailout. But a large pool of voters, up to 20 percent, remain undecided. It is likely that many of these will come out to vote on June 17. Whether they will go for the “devil they know” and continue following the bailout path in the hope that renegotiated terms might offer a ray of hope or whether they will support an untested leftist whose tactics might lead to a euro exit that he insists he does not want remains unclear.

Greenmountain Boy in Burlington, Vermont asks:
Now that the Greeks have had their chance to vent, do you see any swing back from the extremes to the more centrist parties that could actually form a working government or will the elections result in another muddle?

The most recent opinion polls indicated that there was indeed a swing back from some of the extreme parties, particularly far-right Golden Dawn which drew 7 percent on May 6 and was most recently polling at around 4 percent. Polls also showed that 6 out of 10 of those who voted for Golden Dawn on May 6 did so out of protest, not because they agree with the party’s ideology. The recent assault by the party’s spokesman on two female leftist candidates during a live TV debate could erode its support even further.

Meanwhile, the radical left party, Syriza, which came in a surprise second in last month’s elections, has been rising ever since, it seems, and the latest polls put it neck-and-neck with the conservatives, the winner of May 6 polls. Although there is much debate about the possible risk posed by Syriza, it appears to be maintaining its momentum as public opposition to austerity is still strong.

Still, many Greeks are unsettled by Syriza’s game of chicken with the troika and may heed foreign warnings about the dire repercussions of a possible Greek exit from the euro. Anecdotal evidence suggests that a growing number of Greeks, particularly from the center and center-left, are considering sacrificing personal ideology to support conservative New Democracy as the only “guarantee” of further foreign aid and eurozone membership and to ensure Syriza is kept out of power.

Article source: http://rendezvous.blogs.nytimes.com/2012/06/12/greek-elections-niki-kitsantonis-answers-readers-questions/?partner=rss&emc=rss

Prime Minister George Papandreou of Greece Undone by Economics

His commitment to step down as prime minister is not only a devastating blow to one of the more enduring political dynasties in Europe. It may also force a major overhaul of the old-style Socialist Pasok party that was created by Mr. Papandreou’s father and which served as a major roadblock to many of the younger Papandreou’s proposed economic and political changes.

“I think that Mr. Papandreou wanted to reform, but his party failed him,” said Yiannis Boutaris, the mayor of Salonika and one of the few politicians to achieve success outside the nepotism so prevalent in the Greek party monoliths. “He could be forgiven many mistakes because of his name, but the last one — calling the referendum — that could not be forgiven.”

That may be a generous assessment. There are many Papandreou critics who claim he shirked an opportunity to grab history by the lapel and shake out all the elements of an entrenched Greek state that, through decades of wasteful borrowing and spending, had brought the nation to the verge of bankruptcy.

By most accounts, Mr. Papandreou, 59, lacked the relentless political drive that marked his father and grandfather.

His youth was peripatetic, the product of his father’s own time in political exile. He was born in Minnesota and spent formative years in Berkeley, Calif.; Canada; and Sweden.

He supported 1960s- and 1970s-era movements like environmentalism and the legalization of drugs, causes that harked back to his guitar-playing days enmeshed in the counterculture at Amherst College in rural Massachusetts. His roommate there, Antonis Samaras, is now the leader of the New Democracy opposition party and agreed to join a coalition government only after Mr. Papandreou stepped down.

It was not until the early 1980s, when Mr. Papandreou joined his father’s Pasok party as a member of Parliament, that he began to develop his own political identity.

Elected in October 2009 after five years of New Democracy rule marked by corruption scandals, violent riots and a growing sense of economic uncertainty, Mr. Papandreou was little prepared for the profound shock that the Greek deficit he had inherited was twice the size the previous government had claimed.

By December 2009, the failure to keep Greek borrowing in check had exploded into an international issue that would tear at the fabric that held the euro zone together.

Trained as a sociologist, Mr. Papandreou had to quickly get up to speed on such arcane matters as credit default swaps and the difference between voluntary and mandatory defaults. And while he understood, at least theoretically, how urgent it was for Greece to cut its bloated public work force, actually doing so proved almost impossible for a man who owed his political position to his party’s deep connections with the powerful unions for civil servants.

The son of an American mother, he is described as a meticulous and exact man who favors regular jogs, technical gadgets and never-ending lists of options and things to do. He is more fluent in English than Greek — a fact that has drawn scorn in the hypercritical Athens news media.

And from the beginning of his term he has reached out to vast number of advisers in the United States and Europe — including Labour politicians in Britain, former economy ministers in Turkey, the Nobel Prize-winning economist Joseph Stiglitz, who is American, and any number of academics who captured, at least temporarily, his intellectual fancy.

But his critics say that while he was on the receiving end of numerous proposals, he was never really able to develop his own true voice. He could never, they say, make the case to his austerity-ravaged people that he truly spoke for them.

He could not rise to the level of a Churchill in 1939, said Yanis Varoufakis, an Athens-based political economist who years ago was an adviser to Mr. Papandreou. “At a moment like this you need leadership.”

To be sure, Mr. Papandreou devoted his full energies to trying to find a solution to Greece’s debt crisis, all while under the crushing weight, his friends and family members say, of being the third Papandreou to lead Greece.

But he could not reach his people the way his father, Andreas — who spent his years in the United States as a vocal dissident of the Greek military regime — was able to.

“Andreas came from the outside — he spoke directly to the people,” said Nick Papandreou, the prime minister’s brother. “George has been in Greek politics for 30 years. The way he expresses himself is cushioned by this.”

But, his brother adds, the elder Mr. Papandreou, driven more by ideology rather than pragmatism, might not have been so determined to carry out the painful changes that George was convinced were necessary to bring Greece out of the past.

Indeed, during the tense negotiations with his European partners, Mr. Papandreou showed himself to be a relentless bureaucratic tactician, seeking every last advantage to get the money he so desperately needed from Europe.

Early in the talks, for example, he opened up a back channel to Dominique Strauss-Kahn, then the president of the International Monetary Fund. “Why don’t we turn to the I.M.F.?” Mr. Papandreou told intimates. “They, too, will impose austerity — but at least we will get the money.”

Mr. Papandreou’s final ploy — the threat that Greece might leave the euro — proved to be his undoing.

George Papaconstantinou, Mr. Papandreou’s finance minister until he was forced out last June, says the prime minister should be judged against the situation he inherited, which left him little room for maneuvering.

As for any overriding lesson Mr. Papandreou may have learned over the past two years, Mr. Papaconstantinou offered a one-word answer: “Economics.”

Article source: http://www.nytimes.com/2011/11/08/world/europe/prime-minister-george-papandreou-of-greece-undone-by-economics.html?partner=rss&emc=rss

Greek Leader Calls Off Referendum

The decision to abandon his idea of holding a popular vote on the European debt deal did not end the political turmoil here; Mr. Papandreou still faces a rebellion in his own Socialist Party and the fury of some opposition figures, and he will have to weather a difficult confidence vote on Friday. But talk of a possible unity government eased international fears of immediate new elections and a looming default if he did not survive in office, cheering markets in Europe and abroad.

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 that it would back the agreement, reached last week, to write down Greek debt in exchange for austerity measures and a commitment to the euro as the nation’s currency.

The prime minister invited the New Democracy Party to become “co-negotiators” on the deal and later said that talks on a unity government should begin immediately. He also suggested that he would be willing to step aside so that others could form a unity government if he won Friday’s confidence vote. “I am not clinging to my seat,” he said.

He made those comments after the New Democracy leader, Antonis Samaras, accused the prime minister of “deception.” Mr. Samaras was angry that Mr. Papandreou appeared to be trying to hold on to his post after securing the opposition’s cooperation.

Mr. Papandreou’s decision to call off the referendum followed three days of political volleyball that whipsawed world markets, shook the Continent to its foundations and drove angry European leaders to issue an ultimatum on Wednesday demanding that Greece decide once and for all if it wanted to remain a part of the European Union and its currency bloc, the euro zone.

But after a day of political horse-trading, Greece’s Byzantine political storm began to look less like points of departure for Europe than hastily considered parliamentary maneuvers by a prime minister who was looking for a way to shore up support with both the Socialists and the opposition — or to negotiate a graceful exit. As has happened so often in the euro crisis, the fate of the European enterprise seemed to hinge on the political machinations of one of the union’s smallest members.

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

Late Thursday, there were reports that Mr. Papandreou had agreed to step down following the confidence vote on Friday after members of his cabinet urged him to do so for the good of the party. The prime minister, by this account, 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 to keep it in the European Union and the currency zone.

“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’s debt deal, which wrote down some of Greece’s privately held debt by 50 percent, cutting the nation’s private and public-sector debt burden by about 30 percent over all. “What is at stake is our position in the E.U.”

The finance minister, Evangelos Venizelos, confirmed that the referendum had been canceled and said the government should seek approval of the loan deal from a broader majority of 180 members in Parliament — which would require support from some of the opposition — rather than the simple majority of 151 that has backed previous measures.

Few Greeks, weary of austerity, seemed to have faith in their politicians. No matter who is in power, “it will stay the same,” said Stefanos Merkouris, a waiter in Athens. “Nothing’s going to change.”

Steven Erlanger contributed reporting from Cannes, France, and Alan Cowell from Paris.

Article source: http://www.nytimes.com/2011/11/04/world/europe/greek-leaders-split-on-euro-referendum.html?partner=rss&emc=rss

Tapped by a Rival, Greece’s New Finance Minister Faces Daunting Task

But more than any other Greek politician, including perhaps the prime minister himself, Evangelos Venizelos is a Socialist party heavyweight who now stands responsible for convincing Greece, Europe and skittish investors the world over that Athens is capable of reforming the Greek economy and making good on its financial obligations.

With no growth to speak of and a government debt burden equal to 150 percent of its annual economic activity — one of the highest in the world — such a task may well be too much for any one person, regardless of his political skills.

Late Tuesday night, however, in a speech to Parliament, Mr. Venizelos took an important first step by promising structural reforms and a broad crackdown on tax evasion.

As expected, Mr. Papandreou’s reconstituted government helped solidify the Socialist party, known by the acronym Pasok. Early Wednesday morning, it overcame the opposition of the New Democracy Party to win a desperately needed vote of confidence, 155 to 143. All Pasok members voted in favor.

Now Mr. Venizelos, 54, a constitutional lawyer with minimal economic policy-making experience, must persuade Parliament next week to pass the government’s most recent economic plan — centered largely on a 50 billion euro, or $72 billion, privatization effort. That is the requirement imposed by Europe and the International Monetary Fund to make an immediate cash payment and to allow Greece to qualify for a second batch of rescue money needed to stave off default.

More crucially, he must succeed in doing what no other politician in Greece has done before him: persuade Greeks to pay their taxes and get public sector unions to accept the shrinking of the state.

“He is a political animal and he will cut the privatization Gordian knot because he knows the law and the political tricks of how to get the job done,” said Theodore Pelagidis, an Athens-based economist and one of Mr. Venizelos’s top advisers.

Mr. Pelagidis cites Mr. Venizelos’s experience in negotiating a deal with the powerful electricity unions and his role as minister in charge of putting on the 2004 Olympics as examples of Mr. Venizelos’s ability to get things done.

That said, there is a difference between operating in Athens and Brussels, especially now.

Arriving for his first meeting with fellow European finance ministers in Luxembourg on Sunday night, Mr. Venizelos misjudged the mood, according to several European diplomats briefed on the discussions but not authorized to speak publicly.

According to one person, he seriously underestimated the frustration among his European colleagues at Greece’s failure to honor some of its previous pledges.

The new minister began by trying to explain the limitations Greece faced, a stance interpreted by some ministers as an attempt to reopen the austerity package already negotiated.

That prompted several firm responses after which Mr. Venizelos recalibrated his message, according to another diplomat. He was, however, largely sidelined when the ministers’ communiqué was drafted.

Mr. Venizelos, through a spokesman, declined to comment.

In Greece, by contrast, he is thoroughly plugged in. He was most recently defense minister and has had other Cabinet posts including culture, justice and transport — a political résumé that far exceeds that of his predecessor, George Papaconstantinou, whose rapid fall in stature within his party forced the prime minister to call on Mr. Venizelos last week.

It was in many ways a last resort. Having been turned down by Lucas Papademos, the former vice president of the European Central Bank, and several other prominent economic experts, Mr. Papandreou made his offer in a 3 a.m. phone call last Friday.

Article source: http://www.nytimes.com/2011/06/23/business/global/23euro.html?partner=rss&emc=rss

At Impasse, Greek Leader Vows to Reset Cabinet

Earlier in the day, as thousands took to the streets to protest austerity measures, Mr. Papandreou offered to step aside so that his Socialist party could form a coalition government with the center-right opposition, but only if the opposition would support a new bailout plan for the debt-ridden country.

Greece needs to pass a new round of austerity measures by the end of the month in return for fresh loans from the International Monetary Fund and the European Union.

 Mr. Papandreou’s support has been plummeting, even within his party, and the Socialists appear to be lagging behind the center-right opposition for the first time since the current government was elected in 2009. With a five-seat majority in Parliament, Mr. Papandreou has been struggling to get his government fully behind the measures and to contain growing rifts within his party.

Antonis Samaras, the leader of the center-right New Democracy party, has opposed spending cuts. He has called instead for tax breaks and a renegotiation of the terms of Greece’s agreement with its foreign creditors.

After hours of speculation, Mr. Papandreou went on national television just before 10 p.m. local time and announced the cabinet reshuffle. He also criticized the opposition for playing politics with the country’s future.

Mr. Samaras defended his actions in a televised speech after Mr. Papandreou’s appearance, saying it was impossible to participate with the Socialists because “they have lost the trust of both the Greek citizens and the markets.”

Speaking of Mr. Papandreou, he said, “If he can govern, he shouldn’t have asked us for support. If he can’t, he should call elections.”

On Wednesday, thousands of people joined a nationwide strike as Parliament prepared to debate what would be a second round of sharp reductions in government spending. The measures are highly unpopular with Greeks, who have already suffered deep salary and pension cuts.

“We had the first set of measures, that’s over, now they want a second,” said Angeliki Kolandretsou, 63, a retired private nurse who joined the nationwide strike Wednesday. “But what will we see from this? Nothing at all. It will just go to the banks.”

On Wednesday, the police fired tear gas and scuffled with protesters in the central Syntagma Square here. The demonstrators were largely peaceful and from across Greek society, but some in the crowd smashed the windows of a luxury hotel and tried to prevent legislators from entering Parliament. Police officials said they detained more than 20 people.

Violent and often theatrical protests have long been a mainstay in Greece, even before the financial crisis hit. But in a more telling sign of the depth of the anger, peaceful demonstrators have gathered daily in Syntagma Square for three weeks, some sleeping in tents, to protest the austerity measures.

In Greece, there is a deep divide between policy experts, who tend to believe that the country is taking the right steps to get back on track, and a large percentage of Greeks, who feel they are unfairly suffering from the government’s mistakes.

“We didn’t create the debt, they created the debt,” said Lina Pantazi, 40, a public school French teacher, as she stood in Syntagma Square wearing a surgical mask and sunglasses to protect against tear gas that police fired on the crowds.

The new austerity measures aim to raise about $9.1 billion this year through additional tax increases and cuts to public sector spending.

They include a “solidarity tax,” ranging from 1 to 4 percent according to income, and an additional 3 percent tax on the incomes of civil servants — whose salaries have already been cut by up to 20 percent over the last year.

Owners of large properties, yachts and swimming pools would be subject to an emergency tax. The new austerity drive would also slash the Greek civil service, which employs about 800,000 people, by a quarter over the next few years, and sell off $71.45 billion in state-owned assets, including stakes in Greece’s main electricity utility.

Critics accuse the government of cutting wages and pensions while failing to adequately address rampant tax evasion or take on the powerful labor unions that remain a pillar of the Socialists’ power base.

But analysts said that in spite of the political turmoil, the Greek Parliament was still likely to pass the new austerity measures. “It’s going to be difficult, but the dilemma is clear,” said George Pagoulatos, a professor of European political economy at Athens University of Economics. “If the measure doesn’t pass and we don’t get the money, we go bankrupt.”

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Greek Leader Reshuffles Cabinet, Asks for Vote

Earlier in the day, as thousands took to the streets to protest austerity measures, Mr. Papandreou had offered to step aside so that his Socialist party could form a coalition government with the center-right opposition, but only if it would support a new bailout plan for the debt-ridden country. Greece needs to pass a new round of austerity measures by the end of the month in return for fresh loans from the International Monetary Fund and the European Union.

 News of the political instability here rattled world financial markets, which fear that Greece’s failure to agree on an austerity package could lead to a default that could ignite a series of crises in other heavily indebted euro zone countries, like Portugal, Ireland and Spain. That, in turn, could threaten Europe’s banks.

Greece instituted a round of painful budget cuts last year in exchange for international financial assistance that staved off default. With the country now seeking a new round of financing, Greek leaders face the nearly impossible task of balancing the demands of their hard-pressed citizens with those of the I.M.F. and the European Union.

Mr. Papandreou’s support is plummeting, even within his party, and the Socialists in turn appear to be lagging behind the center-right opposition for the first time since the current government was elected in 2009. With a five-seat majority in Parliament, Mr. Papandreou has been struggling to get his government fully behind the measures amid growing rifts within his party.

Antonis Samaras, the leader of the center-right New Democracy party, has opposed spending cuts, calling instead for tax breaks and a renegotiation of the terms of Greece’s agreement with its foreign creditors.

After hours of speculation, Mr. Papandreou went on national television just before 10 p.m. local time and announced the cabinet reshuffle. He criticized the opposition for playing politics with the country’s future.

“I have asked for this effort to be a common one, I made constant appeals for consensus to the opposition,” he said. “Today, I repeated those appeals,” he said.

The prime minister also accused the opposition of leaking details of a highly sensitive preliminary conversation to the news media. Before the two leaders could discuss possible terms, he said, “Certain conditions were made public, which would not be acceptable because they would keep the country in a prolonged state of instability and introversion.”

Mr. Samaras defended his actions in a televised speech later on Wednesday, saying it was impossible to participate with the Socialists in a coalition government because “they have lost the trust of both the Greek citizens and the markets.” Speaking of Mr. Papandreou, he said, “If he can govern, he shouldn’t have asked us for support. If he can’t, he should call elections.”

On Wednesday, thousands joined a nationwide strike as Parliament prepared to debate a second round of sharp cuts to government spending. The measures are highly unpopular with Greeks, who have already suffered deep salary and pension cuts.

“We had the first set of measures, that’s over, now they want a second,” said Angeliki Kolandretsou, 63, a retired private nurse who was one of thousands of Greeks who joined the nationwide strike Wednesday. “But what will we see from this? Nothing at all. It will just go to the banks.”

On Wednesday, the police fired tear gas and scuffled with protesters in the central Syntagma Square here. Some in the crowd smashed the windows of a luxury hotel and tried to prevent legislators from entering Parliament. Police officials said they had detained more than 20 people.

Violent and often theatrical protests have long been a mainstay in Greece, even before the financial crisis hit. But in a more telling sign of the depth of the anger, for three weeks, peaceful demonstrators have gathered daily in Syntagma Square, some sleeping in tents, to protest the austerity measures.

Wednesday’s protest drew 25,000 largely peaceful demonstrators from across Greek society.

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Greek Leaders Fail to Reach Consensus on Austerity Measures

But Prime Minister George Papandreou, speaking to the nation in a televised speech, said there was still hope that an agreement would be reached.

“Essentially, there are many points on which we can agree,” he said. “But there is a need for political will from all sides.” “Over the next few days we will continue efforts to reach a consensus,” he continued, adding that “the government has assumed the responsibility to extract the country from the crisis and will do this with or without consensus.”

The aim of Friday’s meeting was to convince officials of the European Union and International Monetary Fund that Greece had the political will to impose more tax increases and spending cuts on a public already weary after a year of belt-tightening.

The effort came amid mounting speculation about the Greek government’s ability to avert a default, which would very likely lead to a new financial crisis across the euro zone.

Olli Rehn, the E.U.’s commissioner for economic and monetary affairs, said in a statement that the commission “regrets the failure of Greek party leaders to reach consensus on economic adjustment to overcome the current debt crisis.”

“An agreement has to be found soon,” Mr. Rehn said. “Time is running out.”

Earlier in the day, leaders of the opposition in Greece had refused to fall in behind the president, Karolos Papoulias. Antonis Samaras, the leader of the country’s main conservative opposition party, New Democracy, said he would not back a program that would “raze Greece’s economy and destroy its society.”

He called for the renegotiation of the terms of an agreement with the Union and the I.M.F., which last May pledged ¤110 billion in loans to Greece in exchange for the country’s getting its fiscal house in order.

Mr. Samaras also reiterated calls for an alternative approach to Greece’s finances, one that favored the lowering of taxes and faster privatization of state assets.

On Thursday, the head of the group of euro zone finance ministers, Jean-Claude Juncker, said again that the E.U. would be unlikely to step in if the I.M.F. withheld its portion of a fifth installment of emergency funding to Greece — ¤12 billion, or $17 billion, scheduled to be disbursed next month.

Greece’s lenders are demanding additional measures after the country missed its deficit-reduction target for 2010, putting the goals for this year and beyond further out of reach. A mission from the European Commission, the I.M.F. and the European Central Bank is currently compiling a much-anticipated report on the Greek government’s progress, after which European ministers will have to decide how to react.

The situation is difficult because public opinion in creditor countries is hardening and some euro zone governments, including that of the Netherlands, have made it clear that they will not step in and fill the funding gap if the I.M.F does not believe that it can justify releasing its portion. That has increased pressure on the Greek government to agree to revenue raising measures, including on privatization, that will be sufficient to win over the I.M.F.

At the Group of Eight meeting in Deauville, France, on Friday, the United States expressed support for European efforts to prevent a renewed debt crisis in Greece from mushrooming into a larger problem for the euro monetary union, said two European diplomats who were present during the discussions but did not want to be named.

The Americans said that Europe’s ability to manage these problems was important to the United States, but that President Barack Obama did not specify what kind of help the United States would be willing to extend, other than statements of support, the diplomats said.

The European leaders said during the discussions that Europe’s problems were limited to Greece and that they did not believe Greece risked infecting the rest of the euro zone, which covers 17 countries. They pointed to the continued strength of the euro vis-à-vis the dollar as proof that the situation was still under control.

The leaders agreed, however, that Greece needed to be more aggressive in adjusting its own finances, and said they believed that the country would ultimately be able to avoid defaulting on or restructuring its debts.

Greek media has speculated in the past week that the country would hold snap elections or possibly return to the drachma. The E.U. marine affairs commissioner, Maria Damanaki, who is a Greek Socialist, added fuel to the fire when she suggested on Wednesday that talks are already taking place about Greece’s possible exit from the euro zone.

Apart from tax increases and public spending cuts, the Greek government’s proposed austerity program also includes a privatization drive that foresees sales in stakes of state utilities and assets including the state telecommunications company OTE.

On Friday, Deutsche Telekom, which already has a 30 percent stake in OTE, confirmed the receipt of a letter from the Greek finance ministry asking to arrange talks to discuss increasing its stake.

A few dozen employees of the phone company protested a further sell-off by blocking one of Athens’s busiest roads, in front of the company’s headquarters, during the morning rush hour Friday.

Larger protests have been held over the past three days as Greeks, facing a deepening recession and mounting unemployment, seek to air their grievances.

Kevin J. O’Brien in Berlin, Stephen Castle in Brussels and Liz Alderman in Deauville, France, contributed reporting.

Article source: http://www.nytimes.com/2011/05/28/business/global/28euro.html?partner=rss&emc=rss