Papandreou meets with Cabinet, suggests referendum and then denies it

Prime Minister George Papandreou was meeting with his Socialist party’s economic affairs deputies to discuss the issue, a day after holding a near 10-hour informal Cabinet meeting, as he seeks to quell internal party discontent. The new austerity plans are to be discussed by the Cabinet again on Wednesday before the ministers submit the plans to Parliament for a vote. 
Papandreou suggested late Monday he could hold a referendum on the measures, which have been immensely unpopular even with deputies of his own party. The government also appears rattled by continued anti-austerity rallies in Greek cities, which climaxed with tens of thousands of protesters thronging the main square outside Parliament in central Athens on Sunday. 
Traa, the IMF envoy, urged the government to quickly make up for a slowdown in structural reforms in 2011, but also criticised contradicting statements being made from European leaders and talk of a mild restructuring of Greece’s massive national debt. 
“There is no such thing as being a little bit pregnant,” he said. 
The government and several European officials have insisted a restructuring of debt – which could involve paying back less than the full amount Greece owes, or at a later date – is not on the cards, but the rumors have persisted. 
“If you want to do a debt restructuring that will really make a difference, it needs to be very large,” he said. “And if you need a very large debt restructuring that creates untold problems not just for Greece but also for the euro area.” (AP)
Yesterday Papandreou called for the re-establishment of democracy, in a second statement late Monday to a marathon informal Cabinet meeting. He said it is necessary to “permanently cast off” the clientele relations, lack of transparency, dependences, extensive lawlessness, impunity and corruption. 
Papandreou expressed satisfaction with the discussion that took place during the informal Cabinet meeting, noting that everyone agreed that the country’s problem is not simply the “direct and vital problem of the debt”, but rather the need for “deep-rooted reversals to a political and institutional system that has gone bankrupt”. 
The premier said that his government has set in motion the changes needed, but has not succeeded in progressing as far as it wanted, and attributed that delay to the pressing need to deal with “the risk of bankruptcy that we suddenly faced after the elections”. 
Further, the need for national understanding “remains a national need’ to which “all the other (political) forces should have already responded”, he continued. 
The premier reiterates that he was “open” to all the political parties for discussion and to jointly iron out positions on the matter of the major changes and the medium-term programme. 
He invited the opposition parties to jointly, together with the government, negotiate with the Troika with the aim of maximizing the benefits for Greece and the Greek people. 
Papandreou further reiterated that he will persist on the need for backing of the medium-term programme by a “broad political and social majority”, adding that the government was continuously renegotiating, without awaiting recommendations from anyone, and expressed certainty that Pasok and its parliamentary group will support the government’s effort.  (ANA)
On his part, Finance minister Yiorgos Papakonstantinou told the informal Cabinet meeting that the Medium-Term Program on the economy will be tabled in parliament by the end of the week, but it will not be voted on before the upcoming EU summit due to lack of time. Sources said that the new tax bill for 2012 will be tabled in September, providing for simplification of the tax scale, reduction of taxation rates, reduction of taxation of businesses, and reduction of VAT, although the main VAT rate will rise to 23 percent. However, the sources cited Papakonstantinou as saying that foods will not be subject to the 23 percent VAT rate. 
The sources further cited Papakonstantinou as admitting shortfalls in the implementation of the Memorandum, attributing them to the recession in the economy. He added, however, that the government will not back down on its targets. 
The finance minister further noted that the government intends to incorporate two of the proposals recently unveiled by main opposition New Democracy, namely those concerning ‘reserve labor’ and incentives for the repatriation of capital, which it intends to combine with the purchase of Greek bonds with that capital, the sources added. 
Papakonstantinou also assured the Cabinet that the fifth tranche of the 110 billion euros EU-IMF bailout loan will be disbursed to Greece regularly, but the overall solution for the new loan facilitation to Greece, the permanent support mechanism, the Euro-bond and other decisions originally expected to be taken at the EU summit in June will most likely be postponed to the next Summit in September. 
The Cabinet meeting lasted to past midnight, as all the ministers took the floor and covered all areas of government policy. (ANA)
Today and after the news, the main opposition New Democracy (ND) party lashed out at the government for considering what it called a “divisive referendum” and said the government was putting the “cart before the horse” by discussing preparations for holding a referendum before deciding what question should be put to the voters. “A decision on the approach to be followed is made first and the question is decided afterwards. The carriage is put before the horse. They are not interested in the substance, they only care about impressions. This is just another trick,” ND spokesman Yiannis Mihelakis stressed.
“Such a referendum will be divisive and misleading. The dilemmas created by the government cause confusion. They hurt and do not benefit the country. On top of a wrong policy that hurts the economy they seek to put a referendum that divides the Greek people,” Mihelakis pointed out, expressing hopes that the referendum rumours will prove to be just another scenario.
Referring to what the prime minister said in the informal cabinet meeting a day earlier, he stressed that “they try to cultivate an atmosphere of fear in society”. “This effort continues today. We cannot accept this rationale,” he stated and repeated that consensus is out of the question. “We will not put our signature to a mistake. Our main goal is the renegotiation of the memorandum. The absence of a consensus is not what stops the government from doing its job,” he stressed.
Answering ND, our Shrek look-alike government spokesman, Yiorgos Petalotis, said that the government has no plans for a national referendum to approve the Medium-Term Fiscal Strategy. “The Medium-Term plan is not everything but only a stage, a step in the change that the country needs,” he told reporters. Explaining a reference to the possibility of holding a referendum made by Prime Minister George Papandreou during Monday’s cabinet meeting, Petalotis said that this was a standing position held by the prime minister. “In an age when there is a need for great consensuses in order to proceed with major changes, if it is necessary and if such issues of major importance are raised and something like this is decided, a referendum may contribute,” he said.
(Combined Reports – ANA)
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