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| The Eurozone in Turmoil |
| (2011-11-03) |
| Last updated: 2011-11-03 15:58 EET |
The bailout plan for Greece, crafted by Eurozone states, has been dealt an unexpected blow. Greek Socialist Prime Minister Georgios Papandreu seeks referendum for Greeks to have their say on the plan. The fate of the single currency would hinge on the outcome of the vote.
The Greek Prime Minister’s unexpected decision to hold a referendum over the bailout plan has caused a strong effect on the already challenging situation the Euro zone is currently facing. The announcement has taken world markets and European chancelleries by storm and given rise to serious concern. French president Nicolas Sarkozy and German chancellor Angela Merkel summoned the Greek Prime Minister for talks and warned him that his country must make a rapid decision whether or not it intends to stay in the Euro.
Sarkozy and Merkel also called on Papandreu to clarify his stance regarding the bailout plan. The IMF and the EU will also put pressure on Greece, and warned that they will release the next payment of the external aid for Athens, worth 8 billion euros, only if the latter adopts the plan approved in Brussels in October and if any uncertainty relating to the referendum result is cast aside.
The reasons for the referendum to be held have not been officially revealed, but they can be assumed. Georgios Papandreu heads a government that has virtually lost its popularity, after applying an endless set of austerity measures. Pressured by the opposition, the Greek Prime Minister seeks to obtain more legitimacy and offload some of the political responsibility that the new tough measures incur.
Papandreu also lacks political backing within his own Socialist party and the executive itself, which has seen members contesting the referendum idea. On Friday, the ever-frail parliamentary majority will undergo the vote of confidence that the cabinet will call for, on the legislature. Even if it obtains it, Papandreu’s government will still need a consolidated legitimacy, to apply the tough austerity plan, designed by the IMF, the European Commission and the European Central Bank.
The government mainly wants the population to say whether or not it is willing to accept sacrifices, expected to secure the country’s continued Eurozone membership. Opinion polls show that Greeks would not want to give up the single currency, but that they neither cope with economic and financial constraints, which the country’s disastrous situation has placed on them. Under the Greek Constitution, any local public consultation in the national interest can be organized only after its approval by parliament and the president of the republic.
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