– Greek military leadership changes spark opposition outcry (Telegraph, Nov. 1, 2011):
As Greek politics grew ever more chaotic strong political protests erupted as the government moved to replace military chiefs with officers seen as more supportive of George Papandreou, the prime minister.
In a surprise development, Panos Beglitis, Defence Minister, a close confidante of Mr Papandreou, summoned the chiefs of the army, navy and air-force and announced that they were being replaced by other senior officers.
Neither the minister nor any government spokesman offered an explanation for the sudden, sweeping changes, which were scheduled to be considered on November 7 as part of a regular annual review of military leadership retirements and promotions. Usually the annual changes do not affect the entire leadership.
“Under no circumstances will these changes be accepted, at a time when the government is collapsing and has not even secured a vote of confidence,” said an official announcement by the opposition conservative New Democracy party.
“It has no moral or real authority any more, and such surprise moves can only worsen the crisis currently sweeping the country”.
The party said it will not accept the new nominations and will take its own decisions on armed forces changes if it comes to power at the general elections that are expected to take place in Greece if the government loses the vote of confidence on Friday night.
– GREECE – Collapse Of Government Is Imminent (The Daily Bail, Nov 1, 2011):
CNBC Video – Michelle Caruson Cabrera reports from Greece.
The country that invented drama and democracy is not disappointing the world on either front. Greek Prime Minister George Papandreou on Monday called for two high- stakes votes.
The first asks parliament to say by the end of this week whether it has confidence in his leadership. The second is a referendum in which Greek voters would approve or reject, possibly by year’s end, Europe’s latest debt-crisis workout.
The move blindsided European leaders on the eve of a global summit and rocked lawmakers in Papandreou’s party, some of whom are now calling for him to step down. The next day, stocks tumbled worldwide, the euro declined and Italian bonds plunged.
No doubt, Papandreou’s gambit is extremely risky. He has only a three-seat parliamentary majority. And the referendum, if rejected, could push Greece into default and out of the European Union and the single currency. A doomsday scenario could follow, including financial market mayhem, soaring sovereign borrowing costs and cascading bank failures. Europe and the U.S. could fall back into recession.
Still, it was the right thing to do. Greek citizens deserve a say on one of the most important matters in their lifetimes. Perhaps more important, the move could finally force Europe into the full reckoning required to solve its two-year-old sovereign- debt crisis.
- European Commission President calls on Greek leaders to support the bailout package insisting the alternative would be more painful
- Greek cabinet vote unanimously to hold referendum on whether to uphold debt agreement
- Generals face sack in Athens as coup rumours spread
- Papandreou to face confidence vote in Greek parliament on Friday
The Greek prime minister was today preparing for a tense showdown with the leaders of France and Germany after he announced shock plans to hold a referendum on his country’s emergency bail-out.
George Papandreou has arrived in Cannes, France, after securing his ministers’ support for the vote in a mammoth seven-hour cabinet meeting last night. The referendum could take place next month.
If Greece rejects the austerity measures – part of a package to stop the sovereign debt crisis spreading, Europe faces being plunged into an economic catastrophe.
Mr Papendreou will face the wrath of President Nicolas Sarkozy and Chancellor Angela Merkel this evening ahead of the G20 summit.
The pair will then meet with other top world leaders who they will try to convince that the eurozone is not in terminal decline.
In Greece yesterday, little was done to calm the nerves of politicians and financial markets as Athens announced extraordinary plans to sack its military leaders amid rampant speculation that it was trying to head off a coup d’etat.
‘It’s all over. The government is about to collapse,’ said one Greek official. Greece’s former deputy finance minister Petros Doukas agreed: ‘The **** has hit the fan.’
Greek ministers this morning voted unanimously for a referendum on the bailout deal to take place in December, backing the proposal made by Prime Minister George Papandreou as he fought to save his own skin.
He now faces a vote of confidence in the Greek parliament on Friday.
Their vote came at the end of a seven-hour emergency cabinet meeting, during which Mr Papandreou said: ‘The referendum will be a clear mandate and a clear message in and outside Greece on our European course and participation in the euro.
‘No one will be able to doubt Greece’s course within the euro.’
The move has horrified other European leaders, with France and Germany meeting Greek officials in Cannes for crisis talks today, ahead of a G20 summit on which the European economy now appears to hinge.
It heaped humiliation on French President Nicolas Sarkozy, who as leader of the G20 nations was set to try to convince non-European nations he had the euro crisis under control.
European Commission President Jose Manuel Barroso today called on Greek political leaders to come together to support the EU/IMF bailout package agreed by euro zone leaders last week.
‘I want to make a very urgent, heartfelt appeal for national and political unity in Greece,’ he said.
He warned that if Greece failed to support the package, the effect on the Greek people would be much worse than the austerity they are currently undergoing.
‘Without agreement of Greece to the programme supported by the EU and IMF, conditions for Greek citizens will become much more painful, particularly for the most vulnerable.’
Markets rallied after big losses yesterday. In London the FTSE 100 was up 70.11 or 1.29% at 5491.68 this afternoon and in Germany and Paris, markets were up 2.62% and 1.76% respectively.
In the U.S., the Dow Jones was up 1.79% in early trading.
Economists warned that if Greece rejects the debt deal hammered out only last week, which would entail years of austerity, the entire future of the single currency is in peril.
They predicted that Italy, Spain and Portugal are likely to be plunged into a profound economic crisis because of their failure to get to grips with their towering debts.
The referendum would be an effective vote on whether or not Greece should remain in the straitjacket of the single currency and accept years of spending cuts and tax rises, or simply refuse to pay what it owes and crash out of the euro.
The Greek opposition is, if anything, more hostile to the bailout and austerity package than Mr Papandreou, and it would demand an even bigger write-down of the nation’s debts than the 50 per cent agreed with the EU and International Monetary Fund.
The sense of crisis in Athens – ruled by a military junta as recently as 1974 – was compounded by an unexpected announcement that Mr Papandreou intends to dismiss the chief of the defence staff and the heads of the army, navy and air force.
That raised speculation about the possibility of a military coup in Greece, an outcome said to have been deemed possible in a secret assessment by the CIA.
Greek-Cypriot Nobel economics laureate Professor Christopher Pissarides, of the London School of Economics, said: ‘Before 1974, when politicians were arguing and fighting, the military came in and said, “Come on now, let’s stop, there’s military rule until you sort it out”.
‘Since 1974, of course, democracy has worked, but it’s worrying when you have news about armed officers being replaced right in the middle of an economic crisis.’
The Foreign Office in London played down the prospect of a military takeover, saying officials in Athens were insisting that the government had planned for some time to clear out its top brass.
But one British diplomatic source said: ‘Clearly with everyone talking about the country being in turmoil, the timing is odd.’
The most likely scenario is that the government will press ahead with a vote of confidence on Friday, which it looks likely to lose. An interim government will then be appointed before a snap election.
Last night a Greek government spokesman said Mr Papandreou had told his Cabinet he would hold a referendum seeking approval of the bailout deal come what may, and was determined to win Friday’s vote of confidence.
French President Nicolas Sarkozy said the proposal for a referendum had ‘surprised all of Europe’ and the hard-fought European bailout plan for Greece was the ‘only way possible’ to resolve that nation’s debt crisis.
Greece is effectively bankrupt and cannot pay off its debts, even with the tough austerity measures that have been forced upon it.
After fierce resistance, private banks and other investors agreed at a crunch summit in Brussels last week to write off 50 per cent of what its government owes.
The agreement was aimed at cutting Greek debt from 160 per cent of its earnings to 120 per cent by 2020. Without action, it would have ballooned to 180 per cent.
But the Greek people are furious at being asked to endure years of spending cuts and tax rises. There are increasing calls for the country to leave the euro, refuse to pay its way and reinstate the drachma.
In the Commons, Chancellor George Osborne said there was ‘no doubt’ that Greece’s decision to announce a referendum had added to ‘instability and uncertainty’ in the eurozone.
He added: ‘Now ultimately it’s up to the Greek people and the Greek political system to decide how they make their decisions, but I would say it is extremely important for the eurozone to implement the package that they agreed last week, that is what I said was crucial at the time, that’s what they all said was crucial at the time and I think we need to get on with it sooner rather than later.’
Labour peer Lord Soley said: ‘When the history of this period is written it may well be that the Greek decision will be seen as the economic equivalent of the assassination of Archduke Ferdinand at Sarajevo in 1914. It will trigger events way beyond the borders of Greece or even Europe.’
Stock markets around the world crumbled yesterday as the eurozone lurched towards financial catastrophe. The FTSE 100 index fell more than two per cent in London – down 122.65 to 5421.57 – wiping £32billion off the value of Britain’s blue chip firms.
But there were far more punishing losses on the Continent, with shares in Italy and Greece down nearly seven per cent on a day of carnage on the financial markets. The Paris stock market lost 5.38 per cent, Frankfurt tumbled five per cent and the euro fell around 1.5 per cent against the U.S. dollar.
Shares in French banks were the worst hit on fears over their exposure to Greek debt. If Athens defaults, lenders in France look set to bear the greatest losses. One, Societe Generale, fell more than 16 per cent.
British banks did not escape the bloodbath, with Barclays losing 9.5 per cent of its value and state-controlled Royal Bank of Scotland down eight per cent.
Borrowing costs in Italy soared again yesterday as the crisis threatened to spread from Athens to Rome.
Lord Adair Turner, head of the UK’s Financial Services Authority, warned that Italy’s towering debts of 120 per cent of GDP present a much bigger threat to Britain’s banks than Greece.