Greek Leader, in Peril, Faces Confidence Vote

The decision on Thursday to abandon a proposed popular vote on the European debt deal did not end the political turmoil here; Mr. Papandreou still faces a rebellion in his own Socialist Party and the fury of some opposition figures, and the confidence vote later on Friday is seen here as a difficult challenge. But talk of a possible unity government eased international fears of immediate new elections and a looming default if he did not survive in office, cheering markets in Europe and abroad.

Stocks rose by as much as 3 percent in Asia on Friday following the developments from Athens and the leading indexes in Britain, France and Germany opened modestly higher, despite the prospect of further wrangling among Greek politicians, but the German DAX soon began to slide.

In an address to his party’s central committee on Thursday evening, Mr. Papandreou said there was no need for a referendum now that the opposition New Democracy Party had said for the first time that it would back the agreement, reached last week, to write down Greek debt in exchange for austerity measures and a commitment to the euro as the nation’s currency.

The prime minister invited the New Democracy Party to become “co-negotiators” on the deal and later said that talks on a unity government should begin immediately. He also suggested that he would be willing to step aside so that others could form a unity government if he won Friday’s confidence vote. “I am not clinging to my seat,” he said.

He made those comments after the New Democracy leader, Antonis Samaras, accused the prime minister of “deception.” Mr. Samaras was angry that Mr. Papandreou appeared to be trying to hold on to his post after securing the opposition’s cooperation.

Mr. Papandreou’s decision to call off the referendum followed three days of political tumult that whipsawed world markets, shook the Continent to its foundations and drove angry European leaders to issue an ultimatum on Wednesday demanding that Greece decide once and for all if it wanted to remain a part of the European Union and its currency bloc, the euro zone.

But after a day of political maneuvering , Greece’s Byzantine political storm began to look less like points of departure for Europe than hastily considered parliamentary maneuvers by a prime minister who was looking for a way to shore up support with both the Socialists and the opposition — or to negotiate a graceful exit. As has happened so often in the euro crisis, the fate of the European enterprise seemed to hinge on the political machinations of one of the union’s smallest members.

At first, Mr. Papandreou was said to have offered to resign before the confidence vote on Friday. By late afternoon, however, the Greek news media reported during the cabinet meeting that he not only was refusing to resign but was calling off the referendum.

Late Thursday, there were reports that Mr. Papandreou had agreed to step down following the confidence vote on Friday after members of his cabinet urged him to do so for the good of the party. The prime minister, by this account, did not resist the idea.

He has offered no hint of that in public, saying he is simply trying to do what is best for Greece, which is to keep it in the European Union and the currency zone.

“The question was never about the referendum but about whether or not we are prepared to approve the decisions on Oct. 26,” he said, referring to the European Union’s debt deal, which wrote down some of Greece’s privately held debt by 50 percent, cutting the nation’s private and public-sector debt burden by about 30 percent over all. “What is at stake is our position in the E.U.”

The finance minister, Evangelos Venizelos, confirmed that the referendum had been canceled and said the government should seek approval of the loan deal from a broader majority of 180 members in Parliament — which would require support from some of the opposition — rather than the simple majority of 151 that had backed previous measures.

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Steven Erlanger contributed reporting from Cannes, France, and Alan Cowell from London.

via nytimes.com