The article
gives a detailed behind the scenes account of the events triggered by
Papandreou’s bombshell announcement that he intended to proceed with the
referendum. That came following tense negotiations between the Greek PM
and German chancellor Angela Merkel and French President Nicolas
Sarkozy. It also came at the most fragile time for the euro with
European leaders terrified of contagion spreading to Italy which,
according to sources quoted in the article, was simply too big to bail
out.
On October 27th, 2011 George Papandreou returned to Athens having negotiated a 200 billion euro restructuring deal - the now famous PSI or ‘haircut’ which reduced what the state owed private investors in half.
While the French and German leaders apparently thought the issue settled, Mr Papandreou had a surprise for them: he was to call a referendum on the deal in the hope that it would shore up support and silence criticism, particularly from the then (anti-memorandum) opposition leader Antonis Samaras - but also from within his own party.
But Mr Papandreou’s announcement took his European counterparts by complete surprise and threatened to detonate their efforts to keep the eurozone together by creating an additional month of investor uncertainty just at the time that Italy was teetering on the brink as the interest rates on its bonds were ticking upwards.
According to the Financial Times article, George Papandreou was ‘summoned’ together with his Finance Minister, Evangelos Venizelos. Nicolas Sarkozy in particular, due to host the G20 summit in Cannes was beyond livid. “He was ballistic,” an aide is reported to have said “He was ballistic.”
That Mr Papandreou showed up for the meeting at all was apparently a surprise but according to the Financial Times he, “relished the chance to win international support for his referendum idea on a global stage.”
But that international support was largely restricted to the daydreams of Papandreou. During the Cannes meeting Mr Papandreou was presented with a plan agreed upon in his absence by the European leaders. Mr Papandreou could have a referendum but only on the grounds that it was an ‘in or out’ referendum on Greece’s membership of the eurozone.
According to the Financial Times article there was a palpable shift during the meeting, with Mr Papandreou increasingly defeated while his Finance Minister (and long-time rival within PASOK) asserted himself. This shift was later secretly capitalised upon by European Commission President Jose Manuel Barroso who wanted to kill the referendum.
Mr Barroso reportedly had already contacted Antonis Samaras and received his assurance that the New Democracy and opposition leader would back a national unity government. In secret he and his staff had, prior to the fateful meeting with Papandreou, already put forward the name of Lucas Papademos as a potential head of a just such a government. (Mr Papademos succeeded Mr Papandreou in November 2011).
As
Barroso reportedly saw power shift from Mr Papandreou to Mr Venizelos,
he then saw his chance. Pulling the Finance Minister aside he is
reported to have said, “We have to kill this referendum.” Evangelos
Venizelos ‘agreed almost immediately’.
The final chapter in Mr Papandreou’s premiership was effectively written that night as they headed back to Greece. As the Financial Times writes:
“After brief remarks to the press in which he said the referendum would be “a question of whether we want to remain in the eurozone”, Mr Papandreou headed back to Nice airport. In the car, he turned to Mr Venizelos and said that things had not gone as badly as he had feared. Mr Venizelos was incredulous. As Mr Papandreou slept on the flight home, Mr Venizelos, emboldened by Mr Barroso’s admonition, ordered an aide to write up a statement to be released when they landed, at 4.45am on Thursday. “Greece’s position within the euro area is a historic conquest of the country that cannot be put in doubt,” the statement read. “This acquis by the Greek people cannot depend on a referendum.”
Mr Papandreou’s referendum was dead. As was his premiership.”
Read the full article of FT here.
The final chapter in Mr Papandreou’s premiership was effectively written that night as they headed back to Greece. As the Financial Times writes:
“After brief remarks to the press in which he said the referendum would be “a question of whether we want to remain in the eurozone”, Mr Papandreou headed back to Nice airport. In the car, he turned to Mr Venizelos and said that things had not gone as badly as he had feared. Mr Venizelos was incredulous. As Mr Papandreou slept on the flight home, Mr Venizelos, emboldened by Mr Barroso’s admonition, ordered an aide to write up a statement to be released when they landed, at 4.45am on Thursday. “Greece’s position within the euro area is a historic conquest of the country that cannot be put in doubt,” the statement read. “This acquis by the Greek people cannot depend on a referendum.”
Mr Papandreou’s referendum was dead. As was his premiership.”
Read the full article of FT here.
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