Greek Prime Minister George Papandreou has announced that a referendum will be held on the austerity measures associated with the $140 billion bail-out package from European Union countries and the International Monetary Fund. Papendreou said, “We will not implement any program by force, but only with the consent of the Greek people. This is our democratic tradition and we demand that it is also respected abroad.” The referendum is to be held “as soon as possible”, according to a government spokesperson, likely December or January.
The Washington Post reports, “(Today), Papandreou faces a grilling from German Chancellor Angela Merkel and French President Nicolas Sarkozy among others in Cannes in the French Riviera, ahead of the Group of 20 summit (on Thursday and Friday). …Leaders are alarmed because a ‘no’ vote could send shockwaves through the European banking system and the already-weak economy. Even setting a vote could scuttle pending two large pending payouts of bailout money Greece needs to avoid default. And the wait for a result will increase bond market pressure on Italy and Spain, who face rising interest rates because of fears they may default too.” It has also been reported that it will “have serious spillover effects on Portugal and Ireland.”
The Globe and Mail adds, “Finance Minister Jim Flaherty said Canada will use the G20 meetings in France, beginning Thursday, to push for an early solution. Mr. Flaherty is clearly not pleased by this latest referendum plan. ‘It’s not for us to try to dictate terms to the Europeans,’ he said. ‘It is for us to say that delay endangers the global economy and we have interdependent economies in this world.’ …(He) avoided a specific stand on whether Greece should move up or even scrap plans to hold a referendum on the proposed European Union bailout…”
The Post notes, “Some 20 months of harsh austerity have angered most Greeks, with unions staging a wave of strikes and protest marches many of which degenerated into riots.”
Al-Jazeera reports, “Papandreou faces a tough challenge persuading Greek voters to back the bailout plan. With anger running high in Greece over tough austerity measures that have raised taxes, lowered wages and triggered strikes, analysts fear Greeks will vote down their financial lifeline and push the country to economic collapse. A poll over the weekend showed nearly 60 per cent of Greeks have a negative view of the rescue deal, suggesting that voters in the referendum likely to be held early next year, will say no to the rescue package.”
This past June, the Greek parliament “backed a $39 billion austerity program that includes cutting the public sector by 150,000 workers, freezing pensions and raising the retirement age, raising taxes on all income levels, and privatizing about $68 billion in state assets,” reports the Los Angeles Times. The plan to privatize state assets includes selling 27 percent of Athens Water and 40 percent of Thessaloniki Water, two public water utilities, next year. In September, “a new set of austerity measures were announced which include a two-year property tax.” In early-October, the Greek parliament was set to vote on a bill that would suspend 30,000 government workers at reduced pay and further cut public service salaries.
