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Greece - G20

Papandreou fights for survival amid pressure for national unity government

Greece is braced for another day of political turmoil on Friday as Prime Minister George Papandreou faces a crucial vote of confidence which could see the fall of his Socialist government and the creation of a government of national unity. 

Reuters
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Going into Friday evening’s vote, the prime minister’s Pasok party has a razor-thin majority in the 300-seat parliament. And several of the party’s 152 members of parliament have threatened to vote against the government.

Thursday night saw a dramatic U-turn by Papandreou when he backed down from a shock pledge to put a hard fought EU bailout deal to a referendum that had enraged the EU and sent markets tumbling.

The move came after an offer from the conservative opposition party, New Democracy, to back the bailout fund in return for a government of national unity.

World stockmarkets reacted favourably to the U-turn. Tokyo gained nearly two per cent while France was up 0.57 per cent at opening. And the euro rose in foreign exchange markets, despite the decision by the European Central Bank to cut interest rates.

Meanwhile, world leaders meeting at the G20 summit in the French Riviera resort of Cannes kept up the pressure on Athens to accept the debt deal.

French Minister for European Affairs, Jean Leonetti, warned Greece could not only be thrown out of the eurozone, but also out of the European Union unless it ratifies the deal.

“Not to accept the deal is to leave the euro,” he said. “For the Greeks not to accept the deal is to leave Europe.”

Earlier, French President Nicolas Sarkozy and German leader Angela Merkel said Greece would not receive the IMF and the EU’s next eight-billion euro aid installment unless the referendum was taken off the agenda.

Debt-wracked Greece is in danger of running out of cash in just over a month.

Tax on financial transactions one step closer

A Franco-German proposal to tax financial transactions has received unexpected support from the US at the G20 summit in Cannes. French President Nicolas Sarkozy said he had found common ground with his American counterpart Barack Obama on the issue.

“I want to congratulate President Obama’s understanding on several subjects including the tax on financial transactions,” he said. “We have talked over our differences and I think we have found a way for the financial world to make a contribution to solving the financial crisis.”

He added the tax was “indispensable” and “morally imperative” and Brazil and Argentina were not opposed to such a levy.

But the proposal has run into resistance from the United Kingdom, Canada, Russia and China.
 

 

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