Greek PM Calls for Vote of Confidence

As protesters outside the Greek parliament building turned violent, Greece’s Prime Minister said that he would form a new government and seek a vote of confidence from his parliamentary group to avoid default.

Tens of thousands of people who are protesting against the new austerity measures expressed their hostility by encircling the parliament building in Syntagma Square, throwing petrol bombs at the Finance Ministry, while the police fired teargas.

Government sources said that Socialist Prime Minister George Papandreou told the leader of the conservative opposition he would be willing to step aside if a unity cabinet agreed on a clear plan to meet the terms of a bailout by the European Union (EU) and International Monetary Fund (IMF).

One government source said: “Prime Minister Papandreou talked with Mr [Antonis] Samaras today and proposed that if the two agreed on a framework of specific commitments for change in the country and the political system and specific targets, he would be willing to stand down from his office.”

A government minister suggested that a broad renegotiation at present would be impossible, and Mr Papandreou appeared on national television to say he would keep governing through his PASOK party.

He said: "I will continue on the same course. This is the road of duty, together with PASOK's parliamentary group, its members, and the Greek people.

"Tomorrow I will form a new government, and then I will ask for a vote of confidence."

Second Bailout Delayed

Senior European Union officials said that it was unlikely that an agreement for the second international bailout of Greece would be reached at a summit next week and that the agreement would more likely be delayed until mid-July.

Greece faces default on maturing debt in mid-July unless it receives a €12bn tranche of emergency loans, leaving it in a weak position to renegotiate its commitments to the EU and the IMF.

The tranche is on hold until Athens takes new austerity measures, which were demanded after it missed budget targets under its first bailout plan launched in May last year.

The European Commission said on Wednesday that it still expected Greece to receive the tranche, but many investors think a default may be inevitable in the long term.

Jacques Cailloux, an economist at RBS in London, said:

“Even if you look at the best case scenario, where we get parliamentary approval in Greece and the EU agrees a new aid package, you still have big medium-term issues. The political uncertainty is not going to go away, there are implementation risks, privatisation risks, you name it.”

By Millie Schurch

[Image courtesy of World Economic Forum]