This is a backgrounder on the G20 summit from James Corbett.
Amongst other things the allegation is made that Papandreou’s volte-face over the Greek referendum came after a threat was made by Sakozy in a private meeting
"Last week's G20 Summit in Cannes, France is already being written off as a bust by the international financiers who were hoping to bolster the fledgling European Financial Stability Fund with international support and to implement a new global financial services tax which they claim will be the long-term solution to the ongoing global economic meltdown.
Find out more about the behind-the-scenes moves toward a global financial infrastructure in this week's GRTV Backgrounder".
George Papandreou, Greece's prime minister, and opposition leader Antonis Samaras, have agreed on a new coalition government, which will not be led by Papandreou, the office of the country's president has said.
The agreement came after the two leaders held talks on Sunday with President Carolos Papoulias.
"An agreement was reached to form a new government to immediately lead the country to elections after ratifying the decisions taken by the European Council," the Greek president's office said in a statement.
The politicians had been holding meetings throughout the weekend in an effort to break the political deadlock and thrash out a deal for a national unity government demanded by the country's European partners.
IN VIDEO
The presidential statement said the leaders will meet again on Monday to discuss who would lead the coalition government, but that Papandreou would not lead the new administration.
"Tomorrow there will be new communication between the prime minister and the opposition leader on who will be the leader of the new government," the statement said.
Greece's main political parties have also agreed that elections should be held on February 19, the finance ministry said on Monday.
Finance Minister Evangelos Venizelos and Deputy Finance Minister Filippos Sachinidis met with representatives from the New Democracy opposition party to discuss the timeframe of a coalition government to help Greece push through a bailout deal it needs to avoid running out of cash next month.
Al Jazeera's Jonah Hull reporting from Athens said a bare bones deal has been reached but there is awful lot of detail that still needs to be hammered out before a meeting with eurozone finance ministers in Brussels on Monday.
"This is in order to give the eurozone some sense of confidence that Greece was able to play its part in the game. Samaras [the opposition leader] has made some issue on the past about how reforms and cuts have been handled in the past. There will also been some haggling over the precise composition of this coalition - with such a sensitive balance between the two main parties. The New Democracy [party] will also want to know that ministries will be equally weighted and carefully handed out," our correspondent said.
"The prime minister who is picked to run the coalition government must be someone who does not carry too much support on one side or the other. They do not want anyone who poses a threat in the run-up to a general election next year. And the name most featured among analysts is Lucas Demetrios Papademos, a 64-year-old technocrat, an economist who has been a governor of the Bank Of Greece and a former vice president of the European Central Bank."
Earlier, Papandreou - who had come under fire at home and abroad for his short-lived plan to put a eurozone bailout deal up for referendum - told cabinet members that he intended to resign once a coalition government was formed.
He also told his cabinet that elections should not be held before February or March, after a eurozone bailout is approved by parliament
'Bold compromise'
The new government will be tasked with implementing the terms of an October EU bailout deal that calls for further harsh austerity measures on Greece, already at breaking point due to a shrinking economy and rapidly rising unemployment.
Greek media earlier tipped Finance Minister Venizelos to take over from Papandreou as the talks got bogged down for almost two days in a dangerous game of brinkmanship, with Samaras insisting on immediate elections, which Papandreou resisted as too risky.
The damaging political stalemate threatened to see the country run out of cash within weeks after European leaders secured their hard-won overall eurozone debt crisis accord at a summit late last month.
Greek business and church leaders piled pressure on politicians to agree to a national unity government as quickly as possible, saying the country's future was at stake.
"The future of all of us for the next decade is being decided right now," the Greek federation of enterprises said in a statement on Sunday.
"The more the uncertainty lasts, the more the country is literally hanging by a thread," the group said, calling for a "bold compromise of political maturity and national responsibility."
Tumultuous week
Sunday capped a week that has been tumultuous even by the recent standards of Greece, which finds itself trapped in the eye of the eurozone debt storm.
Papandreou set the ball rolling on Monday with a shock announcement that Greece would hold a referendum on the terms of its October bailout deal which calls for further fierce austerity measures.
The move stunned fellow European leaders, sent global markets into a tailspin and earned the Greek prime minister a humiliating dressing-down by France and Germany on Wednesday ahead of a G20 meeting.
Hastily retracting the proposal, Papandreou then turned disaster into temporary victory by winning a nail-biting confidence vote early Saturday by offering to step down in favour of a unity government.
As the week is ending and the political crisis continues in Greece it is time to collect some material
Greek PM 'expected to step down'
al-Jazeera
‘Politicians can’t control Euro crisis’
RT
‘Euro could be dead in a month’
RT
Euro debt crisis: Greek PM George Papandreou to resign when new coalition government formed
Prime Minsiter George Papandreou and opposition leader Antonis Samaras locked in crisis talks to form a new government as eurozone leaders issue an ultimatum that a deal on a coalition must be sealed before a summit of finance ministers on Monday.
The Telegarph
6 November, 2011
George Papandreou, the Greek prime minister, cleared the way for his resignation by scheduling a three way meeting with Antonis Samaras, leader of the conservative opposition, and the president to overcome sticking points over the leadership and duration of the unity government.
A seven point plan for the new government was thrashed out at a cabinet meeting of socialist government. It included a deadline for parliament to ratify the eurozone bailout before the end of December.
Mr Papandreou told the cabinet that the country would be presented with a new government within hours and that he would vacate office soon after. The interim government, led by technocrats, will run the country until a general election is called, probably in the first half of next year.
"It is clear that this government will pass the baton but it will not pass it to a void - it will pass it to a new government, if we agree on it, and I hope this will happen soon. And when I say soon, I mean today, not tomorrow," he said in the text of remarks to his cabinet, released to the media.
"I'm not interested in being prime minister in the new government."
Papandreou also told his cabinet elections should not be held before February or March, after a euro zone bailout is approved by parliament.
Behind the scenes the main figures in Greek politics were under direct pressure to produce a ‘national salvation’ government from Brussels, Berlin and Paris. Mr Samaras was forced to deny that he had been telephoned by Chancellor Merkel with a demand that he sign up to the pact by morning.
President Karolos Papoulias warned that the wrangling between party leaders was increasing the misery of a population battered by budget cuts and a collapsing economy.
"This uncertainty that is torturing the Greek people must end. We must find a solution," President Papoulias said before meeting Mr Samaras.
But Mr Samaras stuck to his position that Mr Papandreou gives up the prime minister post.
"I am determined to help. Provided that Papandreou resigns, everything will take its course," he said.
There were reports last night that Loukas Papidimos, a former central bank governor, was flying back to the country from Frankfurt to lead the interim government.
Evangelos Venizelos, Finance Minister, is likely to take a senior post in the coalition as the main interlocutor with the eurozone.
Mr Venizelos is to lead the Greek delegation to the finance ministers meeting in Brussels today where he is expected to outline the national consensus platform on implementing the 130 billion euro bailout deal agreed last month.
That deal to save Greece from bankruptcy will impose fresh austerity measures on the Greek economy and is the first step in staunching the crisis spread to larger economies, Italy and Spain.
Pressure on the politicians from the church and business added to the sense of national crisis.
Constantinous Michalos, head of the Athens Chamber of Commerce, said the stalemate needed to be broken by the end of Sunday, warning otherwise of dire consequences when the financial markets open again Monday.
"A solution is required immediately otherwise the country risks finding itself out of the eurozone tomorrow," he said. "There is no room for political jockeying. The country needs a new government tonight."
Olli Rehn, European Economic and Monetary Affairs Commissioner, echoed that message saying it was essential that Greek unity government restored confidence in the markets before the opening bell this morning.
"We have called for a national unity government and remain persuaded that it is the convincing way of restoring confidence and meeting the commitments," he said. "We need a convincing report on this by Finance Minister Venizelos tomorrow in the Eurogroup."
And now for the question that everyone in the mainstream has been avoiding - that Greece might leave the Euro and bring back the drachma.
European leaders are 'lifting the lid on Pandora's box'
European leaders have lifted the lid on a "Pandora's box" by raising the possibility of Greece leaving the single currency, economists warned yesterday, as the country's politicians fought to create a fresh government.
After Nicolas Sarkozy and Angela Merkel last week said that Greece had to abide by the rules of the Brussels bail-out agreement or leave the eurozone, Morgan Stanley cautioned that leaders could have set in train a sequence of unintended consequences.
Joachim Fels, head of global economics at Morgan Stanley, wrote that the French president and German chancellor had raised the heretofore "taboo" subject of a country exiting the single currency.
"This is the second time in less than four months that European leaders could have opened a Pandora's Box: on July 21, the decision to involve the private sector in the Greek bailout signaled that euro area government debt is no longer risk-free and thus sparked massive contagion into Spanish and Italian debt markets," he added.
"This past week, by raising the possibility that a country might (be forced to) leave the euro, core European governments may have set in motion a sequence of events which could potentially lead to runs on sovereigns and banks in peripheral countries that make everything we have seen so far in this crisis look benign."
That warning came as Europe stepped up pressure on Greece to break its political deadlock, which is imperilling the country's €130bn (£111bn) bailout.
Greek leaders were last night in talks to establish a new government as eurozone leaders stressed that a deal on a coalition must be sealed before a summit of finance ministers begins today in Brussels.
George Papandreou, Greece's prime minister, cleared the way for his resignation by scheduling a meeting with opposition leader Antonis Samaras and the president to overcome sticking points over the leadership and the duration of a unity government. A seven point plan for the new government was thrashed out at a cabinet meeting, including a deadline for parliament to ratify the eurozone bail-out before the end of December.
Greece's finance minister, Evangelos Venizelos, will lead the Greek delegation to Brussels, where he is expected to outline the national consensus platform on implementing the bail-out deal. Olli Rehn, the EU Economic and Monetary Affairs Commissioner, told Reuters that they needed a "convincing" report from Mr Venizelos.
Calling on Greece to establish a national unity government, he added that Athens' European partners "faced last week a breach of confidence by Greece which meant that Greece took itself on a course that would lead it outside the euro zone.
"We do not want that but we must be prepared for every scenario, including that one, for the sake of safeguarding financial stability and saving the euro," he said.
Events in Greece came as Christine Lagarde was set to begin her first trip to Russia since taking the helm of the International Monetary Fund. Financial aid to rescue Europe's debt-stricken countries was expected to dominate talks.
Moscow has said it is willing to talk bilaterally with affected countries, but has been hesitant over pledging cash to the eurozone as a whole
Spectre of Greek eurozone exit looms as tour firm plans for drachma comeback
German tour operator TUI writes to hoteliers demanding that they agree to renegotiate contracts in drachma
If Greeks were under any illusion that their country's exit from the eurozone is being entertained, it has been dispelled by the German tour operator TUI. Barely hours after the EU powerhouses Germany and France tore up the bloc's own rulebook with the taboo-breaking announcement that a Greek departure from the EU was no longer inconceivable, the travel giant demanded that hoteliers in Greece agree to renegotiate contracts in drachmas.
Amid all the political and economic uncertainty surrounding the debt-stricken country, the spectre of Athens returning to its old currency had suddenly been raised. "It's very sad and we think they have jumped the gun," said the Greek travel executive Christina Tetradis, who vowed to raise the issue at the industry's biggest trade fair, the World Travel Market, which opens in London on Monday.
"I have heard that TUI has sent letters with a clause mentioning drachmas to hoteliers in Crete, which is their largest market. People there are very upset."
“The Tower of Babel” is Collapse Net’s headlines. I can not find anything more appropriate that describes the situation and where the true centre of power lies.
Tough Words
Merkel and Sarkozy Halt Payments to Athens
By Stefan Simons in Cannes, France
“The food was excellent, clearly the product of a gourmet chef. But the conversation was more on the level of a street corner eatery”
Chancellor Merkel and President Sarkozy had harsh words for Greece on Wednesday, warning: "We will not allow the euro to be destroyed." They have also halted bailout payments pending the approaching Greek referendum. The idea of Greece exiting the euro, it seems, is no longer a taboo.
The food was excellent, clearly the product of a gourmet chef. But the conversation was more on the level of a street corner eatery. During a working dinner in the Palais des Festivals in Cannes, France, European Union bigwigs Angela Merkel and Nicolas Sarkozy didn't mince words in talks with Greek Prime Minister Giorgios Papandreou.
When the German chancellor and the French president approached the microphone at 10:30 p.m., it was clear that the three-hour-long meal had not been a relaxing one.
"It was a serious situation, it wasn't easy," said Merkel. "We will defend the euro. We want to do that together with Greece. But we are not going to jeopardize this great project of unity. That is our priority." Just to ensure that her warning was understood, Merkel added: "We respect the decision of the Greek people. But we are not going to give up the euro."
The emergency meeting in Cannes, called on the eve of the G-20 summit to be held in the French seaside town on Thursday and Friday, became necessary after Papandreou called a referendum in Greece on whether the country wants to undergo the belt-tightening measures necessary to receive European Union aid money and to remain in the euro zone.
A Complete Surprise
His announcement came just days after last week's EU summit in Brussels, during which an agreement was reached to slash Greek debt by 50 percent, increase the impact of the euro backstop fund and offer Greece another €130 billion ($178 billion) in emergency loans. Not only did news of the referendum cast doubt on the results of that summit, but it also came as a complete surprise to Merkel, Sarkozy and other EU leaders.
"We made Papandreou ... aware of the fact that his behavior is disloyal," said Jean-Claude Juncker, head of the 17-member euro group, in a Thursday morning interview with German public TV station ZDF. "The euro group would like to have been informed about the intention to hold a referendum at the recent EU summit."
The EU also froze payment of the next €8 billion tranche of the first aid package, passed in early 2010. The payment was set to be wired to Athens in the coming days. Now, it has been made dependent on a "yes" vote in the referendum.
In addition to endangering the European common currency, Papandreou's referendum has thrown his own political career into doubt. He faces a crucial vote of confidence in Athens on Friday and two parliamentarians belonging to his Socialist party have said they will not back the prime minister, according to a report in the Greek TV station NET. Papandreou's government has a razor-thin majority of 152 in a 300-member parliament. Any further defections could mean the end of the Papandreou government.
Europe, though, appeared to have little sympathy on Thursday evening. During the press conference with Merkel, Sarkozy was just as direct as the German chancellor. "We are prepared to help," he said. "That is the foundation of European solidarity. But that also means that Greece fulfils its obligations. We will not allow the euro to be destroyed." He also added: "We must protect the money of our taxpayers."
A Euro-Zone Exit?
The comments, in essence, represented the breaking of a taboo. For the first time, the stability and security of the euro were placed above Greece's ongoing membership in the euro zone. The agreements reached in Brussels shall not be tinkered with. And should Greeks vote no in the referendum, the county could exit the euro zone.
"The referendum in essence is about nothing else but the question, does Greece want to stay in the euro zone, yes or no?" said Merkel, ominously.
Just how Papandreou will respond to the appeals from Paris and Berlin remains to be seen. His Monday announcement has already sent shudders through the global markets and the jitters are likely to remain until the referendum is held, perhaps as early as the beginning of December.
During the VIP dinner that followed, scheduled "for a time after the markets closed" according to German delegations sources, Papandreou was subjected to what amounted to an interrogation session. It was made clear to the Greek premier that, should the majority of Greeks vote against the Brussels resolutions in a referendum, Athens would have to do without the transfer of billions in aid.
"Giving the people a voice is always legitimate," Sarkozy reportedly said. "But the solidarity of all the euro-zone countries only takes hold when everyone agrees to make the necessary efforts."
Merkel and Sarkozy also emphasized the advantages of the package agreed to in Brussels: Aid to the tune of €130 billion, a debt haircut of 50 percent and support for the recapitalization of Greek banks. Without the bailout package, they warned the Greek prime minister, the highly indebted country would not only be threatened with bankruptcy. Its membership in the euro zone would also be at stake.
Papandreou is now expected to execute the referendum by Dec. 4 or 5. Merkel and Sarkozy reportedly advised the Greek prime minister he should tailor the referendum to be a question of whether Greece should remain a part of the euro zone. It is a likely that a majority of Greeks would vote "yes" if that were the question posed. But the word in Athens is that the Greeks want to put the rescue package itself up for a vote. The bailout is deeply unpopular with Greek voters because of the tough austerity measures it entails.
Severe Implications
What has really weighed down the situation, though, is Papandreou's apparent effort to go it alone. The fact that he didn't inform his EU partners of the planned referendum prior to making his announcement "massively changed the psychological situation," Merkel said. Meanwhile, Sarkozy made unmistakably clear: "The Greeks have to decide whether to continue the adventure with us or not. We hope to continue with the Greeks, but there are rules that have to be respected. The Europeans and the IMF can't release the sixth tranche of loans to Greece until Greece endorses the package of Oct. 27," he said.
There is, of course, another reason why time is of the essence. Without EU aid, Greece will run out of money by Christmas at the latest. A "no" by the people, close to 60 percent of whom polls indicate reject the bailout decisions made in Brussels, would be tantamount to an admission of failure. Ratings agency Fitch noted that a rejection of the EU and IMF plan "would increase the risk of a forced and disorderly sovereign default and -- whilst not Fitch's central rating case -- potentially a Greek exit from the euro." The company said both scenarios "would have severe financial implications for the financial stability and viability of the euro zone."
(Reuters) - The threat of a Greek exit from the euro zone hung over a meeting of G20 leaders on Thursday after France and Germany made it clear that Athens must decide urgently whether it wants to stay in the 12-year-old currency bloc.
The summit on the French Riviera had been meant to focus on reforms of the global monetary system and steps to rein in speculative capital flows, but a shock decision by Greek Prime Minister George Papandreou Monday to call a referendum on a new EU/IMF aid package for his country has upended the talks.
Papandreou was summoned to Cannes on the eve of the summit and given a stark warning by French President Nicolas Sarkozy and German Chancellor Angela Merkel, both clearly angered by his gambit, which has sent global stock markets and the euro currency spiraling lower.
They convinced the Greek prime minister to bring forward the referendum to early December and insisted it be focused on the broad issue of whether Greece wants to stay in the currency bloc, rather than limiting it to a vote on a new 130 billion euro ($179 billion) bailout package, which a strong majority of Greeks oppose.
They also made clear that Athens would not receive an 8 billion euro aid tranche it desperately needs to avoid default until the referendum had passed.
Should it fail, the EU/IMF aid would end, plunging Greece into a disorderly default that would reverberate across the 17-nation euro zone, engulfing big economies like Italy and Spain.
"Our Greek friends must decide whether they want to continue the journey with us," Sarkozy told reporters at a joint news conference with Merkel after the crisis talks.
The German chancellor, describing the discussions with Papandreou as "tough and hard," said the goal of stabilizing the euro was ultimately more important than saving Greece if it did not want to be saved.
A chastened Papandreou flew back to Athens with his finance minister shortly after the talks had ended. Before leaving he said the referendum could take place on December 4 and would be focused on "whether we want to remain in the euro zone."
(Reuters) - Greek Prime Minister George Papandreou fought off a barrage of criticism to win the backing of his cabinet Wednesday to push ahead with a referendum the government said would take place as soon as possible on a European Union debt bailout deal.
Some of his party lawmakers called for him to quit for jeopardizing Greek euro membership with his shock decision to call a popular vote, a move that pummeled the euro and global stocks, but the cabinet support at least gives him a stay of execution before a confidence vote in parliament Friday.
Athens, Greece (CNN) -- Stock markets in the United States and Europe dropped dramatically Tuesday after Greek Prime Minister George Papandreou stunned the world by calling a national referendum on international aid for his country.
A "No" vote could theoretically force Greece to crash out of the euro and send shock waves through the global financial system.
Papandreou is seeking public backing for the bail-out deal, which took months to hammer out.
But French President Nicolas Sarkozy and German Chancellor Angela Merkel issued a terse statement Tuesday saying they were "determined to ensure the full implementation, without delay, of decisions adopted by the summit, which are necessary now more than ever."
The agreement would see the country's sky-high debts cut in half, but it comes with strings attached which have led to angry demonstrations in the streets of Greece.
International lenders are demanding that Athens raise taxes, sell off state-owned companies, and slash government spending -- which means firing tens of thousands of state workers.
German and French markets were down about 5% in afternoon trading Tuesday, and the Dow Jones index plunged more than 250 points at the opening before recovering slightly, then falling further.
The announcement of the referendum rattled Papandreou's hold on power Tuesday, as a lawmaker defected from his party, leaving him with a majority of only two in Parliament.
Milena Apostolaki announced her resignation from the PASOK party, saying the call for a referendum was "a deeply divisive procedure."
The European debt crisis claimed its first American victim shortly before Papandreou announced the referendum on Monday, as MF Global filed for bankruptcy protection, leaving top Wall Street creditors holding more than $2 billion in debt.
The commodities and derivatives broker was run by ex-Sen. Jon Corzine, a former head of Goldman Sachs.
Greece's opposition leader Antonis Samaras called for a snap election Tuesday, but it is unlikely he has the votes to force one.
Papandreou has called for a vote of confidence later this week, separate from his call for a referendum on the international bail-out.
Constantine Michalos, chairman of the Athens Chamber of Commerce, told CNN Papandreou's referendum move had taken everyone by surprise, both locally and internationally.
As a consequence, he said, "Greece is facing a credibility gap as a result of the problems that have been created both on a political level and on a financial market level."
Michalos also said he saw little point in Papandreou holding a confidence vote this week, if the bail-out deal -- which was reached after top-level negotiations in Europe -- could be overturned by the Greek people just a few weeks later.
One expert called the surprise plan for a referendum "a political gamble which adds further uncertainty to the European debt crisis."
"The prime minister will be hoping for a vote in favor to strengthen his mandate, but if the Greek population votes against, it will leave the IMF and Greece's European partners in a very difficult situation," said Gary Jenkins of Evolution Securities.
The planned referendum casts a shadow on a hard-fought deal that would allow Greece to write off as much as 50% of its debts to banks.
The agreement for private lenders to scrap half of Greece's debt is worth 100 billion euros to Athens, and comes along with a promise of 30 billion euros from the public sector to help pay off some of the remaining debts, making the whole deal worth 130 billion euros ($178 billion).
No date has been set on the vote, although local news reports say the referendum could come in January. A "no" vote threatens to unravel the deal, which was greeted with fanfare last week as a way to keep debt woes in Greece and other European nations from spilling across other borders, threatening the 17 nations united under the euro currency.
A weekend survey in Greece found nearly 60% opposed the debt deal reached in Brussels last week.
But other surveys have shown a more complicated picture.
A survey by Kappa Research for the newspaper To Vima last week showed a majority of Greeks wanted a referendum on the international rescue plan, and that more would oppose it than accept it.
But in the same survey, 70% of Greeks wanted to stay in the euro, according to RBS European Economics -- a result that may not be possible if they vote "no" on the referendum.
Ferguson: 'Devil is in the details
"(It) clearly opens a can of worms because the referendum vote could go one of two ways," said Frederic Neumann, a senior economist for HSBC.
"If approved, a vote of confidence in government's handling of the situation ... if calmer heads prevail and it can rationally be explained to the public, I wouldn't discount the measure being approved.
"The problems for the markets, until the referendum is passed, there is added uncertainty. That's just an added headache."
Besides the Greek debt reduction plan, last week's European Union deal pledged to quadruple the EU's bailout fund to about $1.38 trillion and raise the capital required to help cushion the region's banks from financial shocks.
Posts
