Bloomberg News

Papandreou Pleads for Greek Unity Before Vote of Confidence

June 19, 2011

June 19 (Bloomberg) -- Greek Prime Minister George Papandreou fended off calls for elections from opposition parties in parliament and appealed for support to push through austerity measures to secure additional funding and avert a “catastrophic” default.

“The country is at a critical crossroads,” Papandreou told parliament in Athens today, kicking off a three-day debate on a confidence motion in his new government. “It is in our hands to change the situation and that is our commitment.”

He called for the vote last week as the opposition rejected overtures for national consensus and his handling of the crisis led to defections from his party. Two ruling socialist lawmakers resigned on June 16, prompting Papandreou’s party to demand an emergency meeting and stoking investor concern that his grip was slipping and the chance of default growing.

Greece needs to secure parliamentary approval of a 78 billion-euro ($112 billion) package of budget cuts to ensure the payment of a fifth loan under last year’s 110 billion-euro bailout as European Union finance ministers meet today to debate the terms of a new funding package of a similar size.

Papandreou said dealing with the country’s debt to avoid “sudden death” should unite Greece’s political parties. “The new government has a duty to complete the talks,” he said.

Opposition

Antonis Samaras, leader of New Democracy, the largest opposition party, repeated his call for elections.

“We are being asked to give support to a government that only a few days ago was squabbling among itself,” he said. “You have lost the confidence of the Greek people.”

Papandreou on June 17 named Evangelos Venizelos as his finance minister to secure support from his allies, amid increasing criticism of new budget-deficit cuts. Papandreou now has 155 seats in the 300-seat chamber.

More than 47 percent of 1,208 Greeks surveyed by Kapa Research SA for To Vima newspaper oppose the measures, which include sales of state-owned companies, higher taxes on restaurants and new “crisis levies” on wages, and want early elections. Almost 35 percent said the package should be approved.

Unions have called strikes against the measures and protests outside the Parliament House are held on a daily basis. Papandreou said today he would call a referendum later this year on changes to the country’s political system and constitution to allay demonstrators’ concerns.

The debate on the motion began today and will end on June 21, two days before EU leaders meet to approve aid that will shield Greece from record borrowing costs for as many as three years. A new demonstration is planned for outside the Parliament House as lawmakers vote on the motion at midnight on June 21.

--Editors: Jennifer M. Freedman, Digby Lidstone

To contact the reporters on this story: Maria Petrakis in Athens at mpetrakis@bloomberg.net; To contact the reporter on this story: Marcus Bensasson in Athens at mbensasson@bloomberg.net.

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net; Craig Stirling at cstirling1@bloomberg.net.


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