Greece prepares to make a 'Unity Government' 5 replies

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Commissar MercZ

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#1 7 years ago

As the EU and international markets watch for whether Greece can implement even harsher austerity measures to meet the conditions of a bailout to avoid a default, the Greek government has entered into its own crisis. PASOK, the ruling party, is now reduced to a very razor thin margin as it looses rogue MPs and support from other groups over its way of implementing the terms of the bailout agreements. Much less all the anger on the streets as the various spending cuts and tax hikes appear to be placing the burden of recovery on Greece's working class and middle-class professionals. As such Greece has been wrecked with mass strikes and demonstrations in the past two years.

Central to this has been Giorgios (George) Papandreou, the leader of PASOK and the current Prime Minister of Greece. Papandreou, the son of Andreas Papandreou, the founder of PASOK and PM twice (once in the 90s and once in the 80s), and the grandson of Giorgios Papandreou Sr, an icon of early modern Greek politics and head of the Center Union. In short he was from a well-known and well-established political family.

Papandreou's party was lifted into power in the 2009 Greek Parliamentary Elections, succeeding its long-time rival New Democracy as economic indicators were worsening as debt climbed from economic fuddling in the previous years and the construction bubble bursting. There was an assumption that his party would avoid the degree of austerity measures that ND was planning- but it did so and much more than people would have imagined.

Papandreou has been busy trying to appease Germany and France in particular over the conditions of the bailouts in the past few years as the Eurozone is undergoing problems from debt issues, particular in nations like Greece, Portugal, Spain, Ireland, and Italy. This has made him appear though to be more worried about keeping politicians and businessmen in Germany and France at ease, rather than his own citizens.

After an attempt to call for a popular referendum on the bailout which backfired rather spectacularily in a political sense, Papandreou bowed to pressure and scrapped plans to do so. He survived a vote of confidence on November 5th, and moved to propose a 'unity' government incorporating members of the opposition, in particular ND, to better implement the austerity measures from the EU and IMF.

ND's leader, Atonis Samaras, refused to offer and called on Papandreou to resign and a caretaker government to be appointed to make way for early elections.

In recent discussions it seems that the unity government plan may go on ahead- but with out Papandreou at its helm. Papandreou has agreed to step down from his post if an agreement to make a unity government.

BBC News - Greek politicians in talks over PM and unity government

Greek politicians in talks over PM and unity government

Greek political leaders have resumed talks on appointing a new PM and interim coalition government after George Papandreou agreed to stand down.

They hope to clear the way for an EU bailout package which would save Greece from imminent bankruptcy.

Greece is under huge international pressure to resolve its political crisis, in order to calm the markets.

Finance Minister Evangelos Venizelos said the coalition talks were proof of Greece's commitment to the EU deal.

Eurozone finance ministers are meeting in Brussels on Monday, adding to the pressure on Greece to find an early solution to the political deadlock. They are continuing discussions on how to defend the eurozone in the debt crisis.

On Sunday, Prime Minister George Papandreou agreed to stand down after days of upheaval caused by his call - now revoked - for a referendum on accepting the bailout.

He is to remain in post for now but will stand down once the new government is formed.

The Greek socialist government and opposition conservatives are now in discussions on the framework of that government and their roles in it. Lucas Papademos, a former deputy president of the European Central Bank (ECB), has been named as as potential interim prime minister, while Mr Venizelos - for a time considered to be candidate - is expected to remain at the finance ministry.

Greece's new political roadmap envisages elections being held - possibly on 19 February - once the new government has approved an EU bailout package. The country must accept the bailout if it is to avoid going bankrupt by the end of the year. But the deal demands stringent austerity measures and spending cuts which have proved hugely unpopular with many Greeks.

Merkel 'respects' decision

Mr Papandreou had been trying to build a national unity government to replace his Pasok party administration, but the main opposition leader Atonis Samaras, of the New Democracy party, had been refusing to negotiate unless his rival resigned.

The two men also disagreed sharply on the timing of new elections, with Mr Papandreou seeking a delay of several months while Mr Samaras wanted them immediately.

But the beginning of the formation of the government was announced after late-night talks between both men, hosted by President Karolos Papoulias, on Sunday.

A Greek government spokesman said a new administration would be sworn in and a confidence vote held within a week if all went well.

Mr Venizelos has also met opposition members and agreed that 19 February would be the most suitable date for elections, according to finance ministry statements.

Mr Papandreou and Mr Samaras had their first phone call on Monday to discuss the details of the deal, according to Greek media.

However, few other details of the plan have emerged, such as how quickly the bailout deal might be approved.

The BBC's Mark Lowen in Athens says there will be immense pressure on whoever takes over while European leaders will be hoping that person will work with them in trying to contain the country's debt crisis and prevent it from spreading further across the Eurozone.

As he arrived at the eurozone finance ministers' meeting in Brussels on Monday, Mr Venizelos said that the formation of a unity government was "proof of our commitment and of our national capacity to implement the programme and to reconstruct our country".

Eurozone chief Jean-Claude Juncker said he was "quite confident that now the situation in Greece is developing in the right direction" but said he did not expect a final decision on the new government by the end of Monday.

Political crisis

The fresh bailout deal for Greece was agreed by the European Union last month, but Mr Papandreou faced the wrath of fellow EU leaders when he announced that he would put the deal to the people of Greece in a referendum.

The idea was dropped days later, but not without sparking a deeper financial crisis and triggering the political crisis which led to the confidence vote last Friday.

Mr Papandreou narrowly won that vote, but had been under continuing pressure to resign amid chaos over the debt crisis.

The EU says no more funds will be released to Greece until the new bailout deal has been approved.

The deal gives the government 130bn euros (£111bn; $178bn) and imposes a 50% write-off on private holders of Greek debts, in return for deeply unpopular austerity measures.

The possibility of Greece leaving the euro has also been raised by EU leaders, if Athens fails to resolve its political and financial problems.

There are fears that the crisis could spread to bigger eurozone countries like Italy.

As the article points out, the agreement has not quite reached a consensus on who will lead this government but a former deputy president of the European Central Bank, Lucas Papademos (PASOK), maybe considered. Other potential candidates are Nikiforos Diamandouros, the current Ombudsman of the EU, and Stavros Dimas (ND, Vice President of the party). The current finance minister was also considered, though he has indicated he will stay in the Finance Ministry in the interim government.

This government will pass the necessary legislation and decisions to shove through the unpopular terms of the bailout, and set early elections for sometime in February- the 19th being listed in the article seems to be the most possible date.

I'm curious to see how Greeks may respond to this news, as well as the rest of Europe. Will it be able to do what makes the Eurozone happy and the markets stable? Will the people of Greece take to the streets?

A future election will probably see the revolving door bring ND back in to power, who will in all likely hood continue the same austerity measures ultimately (despite the positioning of the party members). It would be interesting to see the turn out in that election and the overall mood/apathy from Greeks from and an already low opinion of the two major players on the political scene, PASOK and ND.




MrFancypants Forum Admin

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#2 7 years ago

The plan to bail out Greece is not so bad given the circumstances. However, it seems like the majority of the Greeks does not want it. It is a situation wherea few people who understand what is going on are confronted with the masses who attempt to use democratic principles to enforce the debt-based spending spree they can't live without.

What could be a more destructive force for Europe than left-wingers in Greece refusing to accept reality and right-wingers in Germany who refuse to support plans to throw money at a problem that keeps getting worse?

If European politicians manage to turn this around and avert the crisis this would be a major achievement. If they don't we may very well look at a repetition of the 2008 financial crisis.




Commissar MercZ

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#3 7 years ago
MrFancypants;5582656The plan to bail out Greece is not so bad given the circumstances. However, it seems like the majority of the Greeks does not want it. It is a situation wherea few people who understand what is going on are confronted with the masses who attempt to use democratic principles to enforce the debt-based spending spree they can't live without.

The current spending has been cut a number of times, along with tax hikes, to service this. There really isn't much you can do though, even with these measures to close deficit, if there is no real economic growth to be had. The rate they're going it might simply grind the state to a ground.

What could be a more destructive force for Europe than left-wingers in Greece refusing to accept reality and right-wingers in Germany who refuse to support plans to throw money at a problem that keeps getting worse?

I'm not sure if you can broadly classify a good chunk of the Greek population that widely disagrees with these current policies as all 'left-wing'. The political scene in Greece isn't like that.

But for people who feel that they're doing (or done) nothing wrong, and have to deal with tax hikes, service cuts, or unemployment if they happen to be in a public job, then it affects them too. Doesn't matter if they happen to be left or right wing.

Problem at the same time though is that every route Greece can take is going to screw people over in the end. Accept the bailout? Mandate even more spending cuts and tax hikes, and possible job loss.

More over this would entail having to stay in the Eurozone, and that means the larger members like Germany and France will still continue to have a great deal of influence on the country's policies. So more austerity. More over in order to make itself a 'competitive' member of the block it may move to slash its wage laws and such to encourage some jobs there. But it'll contract all the less and people'll get grinded to the dirt.

Reject the bailout? Face getting ejected from the Eurozone and stand in the harsh seas of the international markets yourself. That'll probably take a long, long time for Greece to even adjust to where it can be considered remotely 'normal' and living standards will take a hit anyways.

It's unlikely Greece'll be able to do what countries like Russia or Argentina did by defaulting on their debt and managing to come out stronger for it. Of course though considering Greece's position in the EU and NATO, and its implications there, it doesn't really have anywhere to go but pummeled into the dust. Greece already has the example of Iceland to look at- another member of NATO and approved to enter EU- to see what happens if it tries to strike out on its own. For the most part the institutions in UK and Netherlands are now pretty intent to make sure Iceland gets burned for that.

With that in mind I don't blame some Greeks for being pretty angry.

If European politicians manage to turn this around and avert the crisis this would be a major achievement. If they don't we may very well look at a repetition of the 2008 financial crisis.

It could be. I think the major implication of this though is what the Eurozone and the EU's power and such can be. Some of those pushing for greater integration of the various national economies may use this as a means to have the member states to adopt common fiscal and monetary policy. In most country's histories we've seen that dire economic straights like these typically introduced a new 'way' of doing things.

But this action has done one thing already and that is pressure on Italy. Berlusconi, or so he claims, promises to step down once the Italian parliament agrees to pass budget legislation and make way for early elections. That or he might be playing to stay at the head of a caretaker government until elections, but the point remains that this little case here is creating an example in other debt-ridden states.




Commissar MercZ

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#4 7 years ago

An update for those of you who don't know- PM Papandreou resigned and the ground work for a unity government has been put in place. PASOK and New Democracy agreed on Lucas Papademos on account of his experience with the ECB. Considering the ECB's role in the packages and such, I suppose they think he's in the best position to handle it until the elections in February.




Nemmerle Forum Mod

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#5 7 years ago
MrFancypants;5582656What could be a more destructive force for Europe than left-wingers in Greece refusing to accept reality and right-wingers in Germany who refuse to support plans to throw money at a problem that keeps getting worse?

The lack of any sort of unified bonds market in Europe or a central bank that can rapidly devalue a currency to clear debt gluts?

...

Oh, wait.




Necromonger

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#6 7 years ago

World Economy - Explained in 3 Steps; In the US rspymc1a.ge3.bmpIn Greece cqhc4olx.2ht.bmpIn Italy ipbbgjrq.nlv.bmp