Papandreou Survives Vote, Uncertain Coalition Pending

Papandreou Survives Vote, Uncertain Coalition Pending
Andy Dabilis and HK Tzanis

After narrowly surviving Friday (November 4th) night's vote of confidence, Greek Prime Minister George Papandreou is now set to begin talks to form a unity government that may not include the major opposition New Democracy Party, which could leave anxious European leaders and world markets still unsettled after a roller-coaster week of political maneuvering and high drama.

Papandreou was on the ropes Friday, after some of his own MPs said they might vote against him after he announced -- and then withdrew -- plans for a referendum on whether to approve a second bailout of 130 billion euros from the EU-IMF-ECB Troika and the austerity measures that come with it.

"I ask for the vote of confidence to avert the instability that would be caused if the country is dragged into elections," Papandreou in his address. "Now is the time for co-operation with good intentions and a feeling of national responsibility."

He survived with a vote of 153 members out of 298, with two absent. Papandreou said he would now be willing to stand aside but gave no commitment, a requirement from New Democracy leader Antonis Samaras, who also demanded elections before taking part in talks for a coalition government.

Elections could be avoided if PASOK can reach a governing deal with parliament's fractious body of minor parties -- ranging from arch Right-Wingers to Leftists and Communists -- who have fought the bailout and accompanying pay cuts, tax hikes, slashed pensions and layoffs that have led to constant protests, riots and strikes roiling Greek society.

Papandreou is expected to meet Greek President Karolos Papoulias later on Saturday to discuss how to proceed.

Finance Minister Evangelos Venizelos, who denounced the referendum, was said to be likely to step into the prime minister post, which could further diminish hopes of a deal with New Democracy.

Papandreou abandoned the referendum idea after harsh criticism from EU leaders, and from Venizelos, who said a defeat could have forced Greece out of the Eurozone and threatened its foundation.

Venizelos said a prospective coalition government would stay in place until February 2012 to give it time to approve and implement the second bailout.

John Sitilides, a principal with the Washington, DC-based Trilogy Advisors and a former State Department liaison for US diplomats in Athens, said the next act in the unfolding drama would take place before markets open again on Monday.

"The world will be watching to see if Greece can have a government in place to improve the Euro loans," he told SETimes.

Sitilides said the vote won't end Greece's problems. "There is not much confidence in Greece's ability to grow out of this anytime soon."

London School of Economics Finance Professor Dimitri Vayanos, who specializes in Capital Market Dysfunctionality, told SETimes that Papandreou backed himself into a corner by not pushing reforms faster, as the Troika wanted.

"Greece wasn't doing anything to prepare for globalisation. It didn't open its markets, it closed and protected them, it has bad institutions," he said

"If Greece defaulted … in an uncontrolled bankruptcy, it would be a major disaster not only for Greece but for the EU and the rest of the world," Nicholas Economides, Professor of Economics at New York University's Stern School of Business told SETimes.

- Provided by Southeast European Times