Greece Votes To Keep Its Head, For Now

Greek Prime Minister George Papandreou survived a vote of confidence late Friday night after pledging he would step aside to form a broad coalition government. Yet, as NPR's Sylvia Poggioli tells host Scott Simon, it's still not clear whether Greece can create a new government.

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SCOTT SIMON, HOST:

This is Weekend Edition from NPR News. I'm Scott Simon. Last night in Athens Prime Minister George Papandreou survived a vote of confidence after pledging he would step aside to forma broad coalition government. Now, this followed last week's $180 billion dollar bailout deal reached with the European Union and Mr. Papandreou's controversial proposal to put that deal to a popular referendum. This comes as the handling of the Eurozone crisis by the French and German leaders continues to aggravate divisions within Europe. NPR's Sylvia Poggioli joins us from Athens. Sylvia thanks for being with us.

SYLVIA POGGIOLI, BYLINE: Thank you, Scott.

SIMON: And explain to us how the prime minister essentially survived the vote by pledging to resign?

POGGIOLI: Well, he indicated that that's what he wanted to do. He would do it. Then he believes there has to be now a very big coalition government. He went to the Chief of State Karolos Papoulias today to start consultations on what he calls a unity government. Last night he told Parliament the bailout deal is so important that it needs broad consensus. So, the idea is that the next government would formally approve the bailout deal in Parliament, otherwise Greece won't get the vital funds and it could go bankrupt in December, and then start implementing the tough measures that have been required by Greece's international lenders.

Then probably by March there would be elections. There's a problem though: the opposition leader, Antonis Samaras, has already ruled out taking part in the coalition, he wants elections immediately. So, this leaves the ruling Socialist Party in a rather awkward situation of creating a coalition with strange bedfellows on the extreme right and to its left.

SIMON: It still sounds like a very confusing political situation.

POGGIOLI: Well, if you remember, Scott, Greece gave the world both the words chaos and Byzantine. Now, the political drama here continues. Last night's confidence motion does not change the fact that the austerity measures which include, you know, radical wage and pension cuts and tax hikes have exasperated many Greeks. They've already lead to big and sometimes violent demonstrations, and after two years of recessions Greek's have very little tolerance for their political leaders.

They see the wrangling as a shameful circus while they get poorer and poorer. Polls show that 60 percent of Greeks reject the terms of the new bailout, so implementing the deal will be even harder for the next government - whatever parties are in it.

SIMON: And let me ask you to look elsewhere in that part of Europe because markets are still reeling about Greece and of course there are growing fears about Italy, a much bigger country, that that might be the next to be afflicted. How serious is the situation in Italy?

POGGIOLI: Well, Italy's debt mountain dwarfs that of Greece. It's $2.70 trillion dollars and Italy has to raise by the end of this year some $72 billion dollars to service it's debt. Yesterday, yields on ten year Italian bonds reached a record, very close to the levels that triggered bailouts for Ireland and Portugal. So, while Italy seems to be following in Greece's downward path it's much, much more worrisome. It's the third largest economy in Europe and a bailout for Italy would break the bank. And what creates even more concern is the perilous state of the government of Prime Minister Silvio Berlusconi, which like Papandreou's, has seen it's support within it's ranks plummet. And the parallel with Greece inspired the political cartoonist Plomteaux of the French Daily Le Monde to coin the expression Papasconi; Berlusconi and Papandreou in juxtaposition to the French and German team leaders, Merkozy.

SIMON: So is Italy now under the same kind of scrutiny Greece is?

POGGIOLI: Yes, and even without getting the money, any bailout. The official line is that Italy invited monitoring by the European Union and IMF of its implementation or reforms that Berlusconi has pledged to undertake. But the IMF managing director Christine Lagarde indicated that Italy lacks credibility. The first inspection by international experts starts already next Monday and inspections are expected to take place every three months. But fears of the Eurozone debt crisis spreading to Italy have also increased tensions with the EU.

British Prime Minister David Cameron, whose country is not in the Eurozone warned that everyday the euro crisis is not solved, it has a chilling affect on the British and world economy. So, despite the scope of the crisis and its potential impact on the global economy, EU leaders are again bickering and national interests are prevailing.

SIMON: NPR Sylvia Poggioli in Athens thanks so much.

POGGIOLI: Thank you, Scott.

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