Papandreou Wins Confidence Vote

Greek Prime Minister George Papandreou won a parliamentary confidence vote on Saturday. In doing so, Papandreou avoided elections which would have torpedoed Greece’s bailout deal and sent the euro zone’s economies into crisis.

Papandreou’s socialist government won with all 300 members of his coalition in parliament supporting the government, but his term as prime minister appeared close to an end. Papandreou told parliament before the vote that he would go to the Greek president on Saturday to discuss formation of a broader-based government that would secure the euro zone bailout, Greece’s last financial lifeline, adding that he was willing to discuss who would head a new administration.

On Thursday, Papandreou had already backed down from the controversial plan to hold a referendum on Greece’s latest aid package that angered many of his own Socialist deputies.
Bowing to the criticism, Papandreou also initiated talks with the opposition on a bipartisan alliance. The two parties remain divided over the mandate and duration of the unity government.

New Democracy is seeking a more narrow mandate for the new government, limited to approving the new bailout deal and preparing the country for elections, ideally within six weeks. New Democracy has demanded the immediate resignation of Papandreou.

The Socialists say the unity government should have a term of at least four months and be empowered to implement many of the fiscal and structural reforms that Greece must make under its bailout program, as well as passing a new budget and carrying out the debt restructuring with banks that own Greek bonds.

It is rumored that Papandreou is considering proposing Finance Minister Evangelos Venizelos as interim Prime Minister in a coalition government.

written by Rachel Brook

Rachel Brook is an up and coming financial writer focusing on commodity price inflation and how the overall market reacts to the price swings. She also covers emerging markets in Africa and SE Asia.

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