'The Greek Situation Has Reached a Dead End'

Spiegel
June 16, 2011

A crumbling government, protests on the streets of Athens and ongoing European disagreement on another bailout package: Greece's debt crisis is on the verge of spiralling out of control. German commentators say that the country's politicians have failed their people.

When it comes to the troubles facing the European common currency, optimism has been the name of the game. Politicians from capitals across the Continent have repeatedly insisted that the euro will be just fine and that Greece, facing the severest of European debt crises, will pull through.

But on Wednesday, there were signs that the high hopes are beginning to crumble. Greek Prime Minister Giorgios Papandreou intends to announce a major cabinet reshuffle on Thursday a day after talks between his Socialists and the conservatives led by Antonis Samaras to form a national unity government collapsed. During the course of those talks, Papandreou reportedly offered to resign.

In addition to increased pressure from the opposition, the prime minister is also facing a revolt from within his own party as he attempts to push through a new five-year austerity package. The package is a key condition for Greece to receive the next tranche of the €110 billion international bailout package passed a year ago. But on Tuesday, a Socialist parliamentarian rebelled, declaring himself an independent. Another said he refuses to vote for the package and on Thursday, two additional Socialist party deputies resigned from parliament, shrinking Papandreou's parliamentary majority to just a handful of votes.

Indeed, observers say that the defections place Papandreou's cabinet reshuffle plans in doubt. "It will be very hard now to find good people to form a government," former Finance Minister Stefanos Manos told Reuters. "They don't trust Papandreou after all the flip-flops he has made."

On Wednesday evening, Papandreou announced plans to hold a confidence vote in parliament, likely prior to next Tuesday. The austerity package needs to be passed by the end of June to ensure adequate funding.

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