Greek Socialists in the balance with key vote

By Nicholas Paphitis

Associated Press

Published: Friday, Nov. 4 2011 8:05 a.m. MDT

Restoration workers use a crane to lift marble slabs at the 5th century B.C. Parthenon Temple on the Acropolis, Greece's best-known ancient monument, in Athens, on Friday, Nov. 4, 2011. Greek lawmakers prepared for a crucial confidence vote in the country's embattled Socialist government, following an international crisis sparked by a government plan to hold a referendum on Europe's new major debt deal. The plan was scrapped Thursday following a hostike reception by markets and EU leaders.

Petros Giannakouris, Associated Press

Enlarge photo»

ATHENS, Greece — Greece's beleaguered Socialist government hung in the balance ahead of a crucial confidence vote in parliament Friday, as both main parties floated plans to approve a massive European bailout and call an early general election.

A week of political drama has horrified the indebted country's European partners and overshadowed the Group of 20 summit in the French resort of Cannes. The threat of a Greek default or exit from the common euro currency spooked global markets and worsened a European debt crisis that has already forced massive bailout deals for Greece, Ireland and Portugal.

Prime Minister George Papandreou on Thursday was forced to abandon his plan to hold a referendum on the debt deal, after markets and EU leaders reacted with hostility to the idea, sparking a global crisis as investors feared that rejection of the hard-fought agreement would force a disorderly Greek default.

Papandreou's two-year-old government has a tenuous majority of two in the 300-seat assembly, but at least two Socialist dissenters have refused to say whether they will back him.

Government ministers and senior Socialist officials continued to pile pressure on Papandreou to hold immediate talks to form a national unity government — signaling that he may have to soon step aside even if he wins Friday's vote.

"It is inconceivable that the government should win the confidence vote and then pretend that nothing had happened," Health Minister Andreas Loverdos said in a statement posted on his Internet blog.

"Unless immediate steps are taken toward the formation of a national unity government, I will have no place in that political process," he added, without elaborating.

Also Friday, Finance Minister Evangelos Venizelos spoke by phone with German Finance Minister Wolfgang Schaeuble, Jean-Claude Juncker, who chairs meetings of the eurozone's 17 finance ministers, and EU's Monetary Affairs Commissioner Olli Rehn to officially tell them the referendum is off.

The minister told them the aim of Friday's confidence vote was "to seek and achieve the broadest possible consensus and cooperation for the benefit of the country" — without giving further details.

The new debt deal would give Greece a €130 billion ($179 billion) rescue package — on top of the €110 billion ($152 billion) it was granted a year ago. It would also see banks write off 50 percent of the money Greece owes them, some €100 billion ($138 billion). The goal is to reduce Greece's debts to the point where the country is able to handle its finances without constant bailouts.

If the deal stalls, Greece will not get the next €8 billion ($11 billion) installment of its loans and will probably go bankrupt before the year is out.

Papandreou has given no indication that he plans to resign shortly, although he said Thursday he was not "glued to his seat." But both his Socialist party and the opposition conservatives are talking about elections — though they differ strongly on the timing.

A senior Socialist lawmaker said Friday if the government wins the late-night confidence vote, it can then launch talks with the opposition conservatives on forming a caretaker administration to lead the country through the next few crucial months, when Greece must approve the bailout and thrash out debt write-off details with banks.

Christos Protopappas said elections could then be held in February or March.

"We need three or four months ... to rationalize the situation, restore calm to the country, get rid of that €100 billion in debt and build international credibility," Protopappas, the Socialists' parliamentary spokesman, told state-run NET radio. "Then we can get back at each others' throats for a month with elections — at that point everyone will be able to wait for us."

The conservatives don't want to wait. An angry New Democracy party leader Antonis Samaras insisted Thursday that Papandreou has to go now, and demanded elections within the next six weeks.

"Mr. Papandreou pretends that he didn't understand what I told him," he said. "I called on him to resign."

Protopappas argued that holding early elections now would drive Greece to bankruptcy.

"The electoral process takes about 40 days, and soon we be unable to pay salaries and pensions, while nobody will be able to negotiate with us on the bailout agreement," Protopappas said.

Polls indicate the Greek public is close to the breaking point after more than 20 months of harsh austerity cuts and tax hikes, and waves of general strikes and protests have often degenerated into riots. Recent opinion surveys show 90 percent of Greeks oppose Papandreou's policies and his party has just 20 percent public support.

The Socialists came to power in 2009, and immediately discovered that, under the ousted conservatives, Greece had falsified financial data for years.

A labor union plans to protest outside parliament later Friday.

Associated Press writers Elena Becatoros and Derek Gatopoulos in Athens contributed.

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