Referendum on EU aid package
Prime Minister George Papandreou has called for a referendum on the new EU bailout of €130bn plus a 50% write-down of its current debt. He has also called for a confidence vote which will follow a debate on the loan. The debate will start on Wednesday and conclude with the vote on Friday.
If it can get past the confidence vote, then the government will hold the referendum in January 2012. It is believed that the voters will be asked to say either ‘yes’ or ‘no’ to a new law to ratify the new loan contract.
Papandreou, in his statement to parliament, said that “We trust the citizens, we believe in their judgment, we believe in their decision.”
If the referendum passes a yes vote then Papandreou has stated that with a bigger debt comes more austerity. The alternative has not yet been spelt out but would presumably lead to Greece withdrawing from the Eurozone.
By making this move Papandreou has placed the responsibility for the future direction of the country firmly with the people. Current opinion polls suggest that 60% viewed the EU summit agreement negatively. However, a majority wish to remain with the Euro rather than return to the drachma.
The move caused outrage on the part of opposition parties who will now find themselves having to campaign either for a yes or no vote. The main opposition New Democracy (ND) condemned the prime minister saying that his proposal was a ‘constitutional and democratic deviation’. New Democracy leader, Antonis Samaras, has asked for a meeting with President Karolos Papoulis.
The confidence motion also ties in members of the prime minister’s Panhellenic Socialist Movement (PASOK). The announcement has led to a political storm which could yet force the government to retract. If it does then it may choose to say that the detractors have denied the people their say. The danger, however, is that all of this could be seen as a sign of weakness on the part of the prime minister and his party.