Saturday, 5 November 2011

Eurozone: Playing with Greek fire in Athens

Where are we now? The FT Eurozone crisis live blog continued to offer excellent coverage 4 November 2011, including the G20 summit in Cannes. There you have a recap of the whole day until late afternoon, if you stand reading the updates upwards from the end.

For later developments in Greece we can go to Financial Times Deutschland, which presents the three protagonists of the power struggle in Athens: prime minister Giorgos (or George) Papandreu (Pasok), finance minister and rival Evangelos Venizelos (Pasok) and the main opposition leader Antonis Samaras (New Democracy)(in German).

Again a word with Greek origins comes in handy: paradox. Papandreou won the confidence vote (153-145) at midnight local time, after promising to step down, writes Financial Times Deutschland (in German). He wants to negotiate a new, broadly based government from a position of strength. Samaras calls for early elections, where Pasok could expect a thrashing, and a caretaker government to implement the €130bn eurozone rescue package in between.

In short, something has to give before Greece goes bankrupt mid-December. Not very reassuring for the eurozone governments and markets.

BBC News Europe clearly report Papandreou's stand before winning the vote of confidence. He promised power-sharing talks between parties, but ruled out snap elections as catastrophic (note Greek word origins), and he said that the bailout deal had to be accepted. Papandreou is going to inform the president of his intentions today, Saturday. Mark Lowen adds that Greeks - and all of Europe - are watching anxiously for Papandreou's next move.

The Financial Times looks toward the beginning government talks. Papandreou wants the president Carolos Papoulias to hand him a mandate to form a new government under another socialist politician, but without a rush to new elections. New Democracy rejects the plan and demands new elections within six weeks.

The Wall Street Journal Europe describes the situation, polarised between a Papandreou intent on the socialists leading a more broadly based (interim) government and the conservative leader Samaras finding his proposals rejected by the Pasok leader. The eurozone leaders are deeply worried about the fallout from a possible Greek default.


Is it possible to form a new and government during the weekend (without New Democracy?), before the markets open and EU finance ministers meet Monday? What would be the usefulness of a minor adjustment, except offering Papandreou an 'honourable' exit?

They seem to be playing with Greek fire in Athens.

Ralf Grahn