Papandreou Survives Vote; Focus Shifts to Berlusconi

Nichole Harper
04 Nov, 2011
New York City

George Papandreou won the closely watched vote that paved the way to form a unity government ahead of the elections that are likely to be held as early as March. The vote is expected to avert a Greek referendum that may set off runs on the banks in many countries in Europe.

[R]7:00 PM New York – George Papandreou won the closely watched vote that paved the way to form a unity government ahead of the elections that are likely to be held as early as March. The vote is expected to avert a referendum that was feared to set off runs on banks in many countries in Europe.[/R]

Greek Prime Minister George Papandreou won the parliament confidence vote after he agreed to step down and form a unity government.

In a closely watched vote in Greece, Italy and Europe, Papandreou won the vote in a 300-member parliament by 153-to-145.

The debate and the vote, broadcast live on the state run Vouli TV, attracted a large number of viewers from Europe in the wee hours of early Saturday.

Though filled with anxieties, the voting process looked mechanical after Prime Minister Papandreou cut a deal with the opposition party to form a national unity party that is most likely to exclude him.

Earlier in the day, Prime Minister Papandreou was forced to seek the support of the opposition New Democracy party leader Antonis Samaras after more than 40 members of his own Socialist PAKOS Party revolted.

New Democracy Party controlled 85 members in the parliament and has consistently voted against the bailout and bond restructuring in the last six months. However, Samaras softened his stance after Papandreou decided to put the EU bailout agreement on a referendum that may or may not have garnered the popular support and led to the departure or exit of Greece from the euro zone and the European Union.

The agreement between the parties paved the way for the formation of the national unity government under the supervision of President Karolos Papoulias.

Behind closed doors, Finance Minister Evangelos Venizelos worked with the leaders in Europe and banking authorities that helped to cut the Greek deal and assured that the national unity government will quickly ratify the EU bailout and Greek bonds restructuring plan.

Venizelos also assured to European leaders that the new government will not put the painfully worked out EU bailout to a referendum that may win a populous approval, however that is not certain.

Though the parliament may be on the way to reorganize the government, Greek citizens were looking forward to express their votes on the EU bailout. The fate of the referendum is still not clear to many political analysts in Athens. It may be back on the table.

Much of the speculation in the Greek press had focused on the possibility of the negative outcome from the referendum and that may set off a run on banks not only in Greece but in many other countries, the worst nightmare for European politicians and policymakers.

Investors remained nervous and shifted focus to Italy as Prime Minister Silvio Berlusconi prepares to face restive lawmakers next week. Italy agreed in principle the need to implement austerity measures in a letter written to G20 ministers at a meeting in France.

He also “invited” International Monetary Fund to monitor the progress Italy makes in implementing the austerity measures of €85 billion that are demanded by the European leaders and the European Central Bank.

The surprise move was welcomed by investors but earlier in the day the yield on the Italian bonds increased 10 basis points to 6.3%, near the record level since the creation of the euro.

At the close on Friday, the euro jumped to $1.3804 and financial markets in Europe closed mixed with a negative bias after a week of tumultuous trading that came close to rocking the foundation of the euro zone and the European Union.