Business World

Tuesday 26 September 2017

Greek PM pushing ahead with referendum on bailout

Maria Petrakis, Natalie Weeks and Marcus Bensasson

GREECE will proceed with a referendum on the European Union's financing package and Prime Minister George Papandreou will win a vote of confidence in Parliament this week, government spokesman Angelos Tolkas said late last night as doubt continued to swirl around the future of the Greek government.

Markets in New York enjoyed a late rally as hopes grew that a referendum might not be held but fell again following the spokesman's remarks.

The comments came as Mr Papandreou discussed both votes with his cabinet in Athens. Greek Health Minister Andreas Loverdos and two other members of Mr Papandreou's cabinet were expected to tell the prime minister to drop the plan.

"We're not retreating on all the things we needed to do to save the country," the spokesman added.

"As the prime minister said to his lawmakers yesterday, this is how we're proceeding and these are our next steps."

Mr Papandreou's grip on power weakened yesterday following a rebellion by some deputies after his decision to put the bailout plan to a referendum.

One, Milena Apostolaki, said she will defect from Mr Papandreou's socialist Pasok party, leaving him with 152 deputies in the 300-seat chamber.

Another four lawmakers have criticised the plans for the referendum, stopping short of defection, and six members of the party called on the premier to resign in a joint letter.

Other deputies have called for a national unity government. Mr Papandreou won his last major vote on austerity measures by 154 votes to 144 two weeks ago.

"If it continues with the referendum, we will end up with a default and the default will push us into the drachma," former Greek finance minister Stefanos Manos said yesterday.

The referendum call puts in jeopardy the payment of the next installment of bailout funds by the International Monetary Fund and the European Union, he added.

Another key member of the ruling party, Vasso Papandreou, called on the Greek president to move toward forming a national unity government.

Rejection

A rejection of the EU-IMF aid plan "would increase the risk of a forced and disorderly sovereign default" and raises the chance of Greece leaving the euro, Fitch Ratings warned yesterday.

Mr Papandreou (59) wants to hold a referendum after details of last week's second bailout package for Greece are approved. The vote of confidence in Parliament is currently scheduled to begin today.

Before then, Mr Papandreou will travel to Cannes to discuss the crisis with Group of 20 leaders.

"The crisis in the country has taken on uncontrollable dimensions," said Ms Apostolaki.

"The titanic effort needed to exit the crisis needs national acceptance and social support. A referendum is a deeply divisive process."

Most of the thousand people surveyed last Thursday, the day the new bailout package was announced, said the deal should be put to a referendum.

Forty-six percent said they'd oppose the plan at such a referendum. In the same poll, more than seven in 10 favoured Greece remaining in the euro.

Irish Independent

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