04/11/2011 Newsnight


04/11/2011

Presented by Emily Maitlis. Greece's economic future is on a knife-edge as Greek PM George Papandreou faces a confidence vote in parliament. Newsnight assesses the repercussions.


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Transcript


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They told us there was six weeks to save the euro, those six weeks are

:00:09.:00:14.

up, what have they to show for it? In Cannes the masters of Europe

:00:14.:00:18.

have failed to find anyone to pay for their bailout. As we go on air,

:00:18.:00:21.

in Greece the parliament is voting on whether to topple the Government

:00:21.:00:24.

that agreed to accept it. Back there the Greek Prime Minister

:00:24.:00:28.

is still fighting for his political life, many MPs have already written

:00:28.:00:33.

him off, but he doesn't seem to have got the message.

:00:34.:00:40.

At the G20, there is no deal, because every time they try to put

:00:40.:00:44.

figures on a bait youl deal, they raun against the will of their -

:00:44.:00:48.

they ran up against the will of their own electorates. The finger

:00:48.:00:51.

is pointing at Germany, we have a senior member of Angela Merkel's

:00:51.:01:01.
:01:01.:01:04.

Good evening. As we go on air this evening, a vote over 1,000 miles

:01:04.:01:08.

away could dictate all our futures. In Athens the parliament will

:01:08.:01:13.

decide if it still has confidence in the Prime Minister. Man who has

:01:13.:01:17.

led his own country and other countries around the houses in a

:01:17.:01:21.

series of contradictory statements in the last few days. In Cannes the

:01:21.:01:24.

summit that was meant to bring definitive results, has brought

:01:25.:01:31.

little but of a firmations of the blieldingly offous - affirmation of

:01:31.:01:39.

the blindingly obvious. We go to Paul Mason in Athens. The

:01:39.:01:43.

MPs started voting a short time ago, they were supposed to start at the

:01:43.:01:46.

top of the hour, they were late. Many people said that was bound to

:01:46.:01:51.

happen. This really is going to be quite an extraordinary moment when

:01:51.:01:57.

we do get the result. The Prime Minister's Socialist Party, PASOK,

:01:57.:02:06.

has a wafer-thin majority, but most say there are eight of his own MPs

:02:06.:02:09.

who have indicated they will vote against him. In theory he should

:02:09.:02:13.

lose. He's daring them almost to bring down the Government, knowing

:02:13.:02:23.
:02:23.:02:27.

that would put this whole eurodeal back into crisis. He's daring that

:02:27.:02:30.

hostile vote. On the other hand, there has been great deal of talk

:02:30.:02:32.

today that they have received assurance that is if they do vote

:02:32.:02:38.

for him and give him, dignity, as it is called, le soon step down and

:02:38.:02:43.

set about negotiating a coalition Government to put that rescue

:02:43.:02:46.

package through. The EU one, through the parliament, with cross-

:02:46.:02:50.

party support, and then get out of the way. We still don't have that

:02:50.:02:55.

result. The parliamentary dynamics are complex. He has sent a shot

:02:55.:03:00.

across the boughs already this evening, that saying snap elections

:03:00.:03:06.

would be a catastrophy? Absolutely, knows that, he knows his own party

:03:06.:03:09.

dissenters know. That no-one wants to take responsibility for this,

:03:09.:03:14.

although he got a probum from Germany and France, for his

:03:14.:03:17.

referendum suggestion, that really has now collapsed as an idea, if

:03:17.:03:21.

you bring down the Government here, either as the opposition or the

:03:21.:03:31.

dissenters within PASOK, then you take that approbium. This is the

:03:31.:03:36.

last gamble he's resting on. Most people think if it works and

:03:36.:03:40.

retains his two-seat majority and scrapes through, it will be only on

:03:40.:03:44.

some sort of promise to go, because he has lost the faith of so many in

:03:44.:03:48.

his own party. Thank you very much. We will be

:03:48.:03:52.

back to Mark a little later as things develop. Let me take you to

:03:52.:03:57.

Cannes. Our economics editor is there. Most of them packed up and

:03:57.:04:02.

gone home, what have they to show for it? Well, they did manage to

:04:02.:04:06.

save the situation with the Greek bailout. They actually managed to

:04:06.:04:11.

pull it out of the fire, 48 hours ago it was entirely possible that

:04:11.:04:16.

Mr Papandreou and his ill-fated referendum proposal could have

:04:16.:04:22.

scuppered the whole euro bailout deal that was agreed a week ago. As

:04:22.:04:26.

we have been hearing it is Mr Papandreou who looks more likely to

:04:26.:04:31.

be history. However, to save the euro bailout deal is to save what,

:04:31.:04:35.

it was always vague, never funded and never guaranteed to work. What

:04:36.:04:40.

they have been trying to do is work out how to raise a trillion plus

:04:40.:04:46.

euros to make the bailout deal real. They looked first to the EFSF, the

:04:46.:04:49.

euro bailout fund signed off last week, China said they didn't want

:04:49.:04:54.

to put money into it, it is too risky. Then they looked to the IMF,

:04:54.:04:59.

here you run into problems of democracy, neither Americans or the

:04:59.:05:02.

Brits could can get extra money for the IMF through their parliaments.

:05:02.:05:06.

What about the ECB, there it is Germany, Mrs Merkel has been under

:05:07.:05:09.

severe pressure today to do something with the ECB, she's

:05:09.:05:13.

telling them she can't, there is a constitutional court, and the

:05:13.:05:20.

parliament. It is just stasus. mood then, between the leaders,

:05:20.:05:25.

given there is nowhere to go with any of these, what was that like?

:05:25.:05:30.

It has been quite bitter. And remember the world needs

:05:30.:05:34.

rebalancing, the world is in crisis and facing a growth crisis. You can

:05:34.:05:37.

only rebalance the world in an orderly way at a place like this,

:05:37.:05:41.

with all the leaders. That was supposed to be their agenda,

:05:41.:05:44.

instead they get knocked off by Greece. But, I think,

:05:44.:05:48.

psychalogically, once they have shouted at Papandreou, and it was

:05:48.:05:54.

literally a balling out he was given, and then he leaves, the

:05:54.:05:58.

atmosphere is soured, they spent two days sniping at each other, you

:05:58.:06:02.

could pick it up in the lip reading of some of their photo

:06:02.:06:05.

opportunities. At the end of the day, the problem has been, they

:06:05.:06:12.

haven't got the will to come together, and go forward. In this

:06:12.:06:16.

situation, as in diplomacy, in economics if you don't go forward

:06:16.:06:20.

you go back wards. Last night George Osborne said to me I think

:06:20.:06:23.

we will have numbers for the bailout part of the programme

:06:23.:06:27.

before you go on Newsnight. They have got none. Their expectations

:06:27.:06:32.

have been dashed even over the space of 24 hours. It has soured

:06:32.:06:39.

things, as I have been seeing today. These are not the faces of happy

:06:39.:06:43.

people. The G20 leaders left Cannes tonight knowing they have averted a

:06:43.:06:49.

Greek disaster, but only stored up a wider European one maybe. As for

:06:49.:06:52.

a strategic rebalancing of the world, they hardly had time to

:06:52.:07:00.

think about it. There are a lot of institutions here in Europe. I

:07:00.:07:05.

think, I'm not sure whether it was Sarkozy or Merkel, or Barroso, or

:07:05.:07:10.

somebody, they joked with me that I had gotten a crash course in

:07:10.:07:14.

European politics over the last several days. And there are a lot

:07:14.:07:20.

of meetings here in Europe as well. But, for all the meetings, they

:07:20.:07:30.
:07:30.:07:31.

achieved very little. The commune Kay confirmed that Italy would the

:07:31.:07:41.
:07:41.:07:52.

The aim of the IMF moves was to allow the fund to get around the

:07:52.:07:57.

problem that nobody's parliament, not Britain's, not the USA's, wants

:07:57.:08:01.

to vote more money through for the general fund. A point Mr Cameron

:08:01.:08:07.

rammed home. We are ready to expand the resources of the IMF, as that

:08:07.:08:11.

becomes necessary resourcing the IMF is not a substitute for the

:08:11.:08:15.

eurozone dealing with its own issues and problems. Chancellor

:08:15.:08:18.

Merkel complained bitterly about the lack of outside support for the

:08:18.:08:24.

EFSF, the bailout fund, and then left, early. Meanwhile, the bond

:08:24.:08:28.

markets pushed Italy's borrowing costs to its crisis high, and left

:08:28.:08:33.

the ECB as the only buyer. To hold the line, Governments have pushed

:08:34.:08:38.

international pressure to its limits. Last week Angela Merkel

:08:38.:08:42.

phoned the Italian President to express doubts about Mr

:08:42.:08:46.

Berlusconi's Government. And President Sarkozy had put massive

:08:46.:08:51.

personal pressure on Greece. Prompting this question.

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I said it is evident that he and Mrs Merkel are trying to change the

:08:55.:08:58.

Governments of Italy and Greece, how is that just, and once you have

:08:58.:09:04.

started, where will it stop? TRANSLATION: I'm quite sure that

:09:04.:09:08.

you are wrong, very wrong. We didn't want to change the

:09:08.:09:12.

Governments, either in Greece or in Italy. That's not the role that we

:09:12.:09:18.

play. That's not my idea of democracy either. But it is quite

:09:18.:09:21.

clear that in Europe, and the perhaps that you come from an

:09:21.:09:25.

island, means you can't understand the subtlies of European

:09:25.:09:32.

construction. I'm sorry to say that so frankly.

:09:32.:09:36.

There are some rules to be respected, if we don't abide by

:09:36.:09:41.

that rules, you have to leave Europe, it is as simple as that.

:09:41.:09:46.

be fair, after a week like this, we're all struggling to understand

:09:46.:09:51.

the complexties of Europe. Joining me now to discuss what we have

:09:51.:09:58.

heard from both Athens and Cannes, Angela Merkel's Chief Whip in the

:09:58.:10:02.

German parliament, and a former Labour minister to played a key

:10:02.:10:06.

role in rescuing the international banking system in 2008, and from

:10:06.:10:11.

New York, the financier who has negotiated on behalf of global

:10:11.:10:15.

banks and sovereign debt crises around the world. If I can start

:10:15.:10:19.

with you, we come away from a summit that was meant to be saving

:10:19.:10:23.

the euro, with very little achieved? May I remind you that

:10:23.:10:27.

last week, in the Brussels summit, a lot was achieved. It was a very

:10:27.:10:31.

convincing package. The stock markets were jubilant, and then

:10:31.:10:36.

there was the surprise in announcing a Greek referendum. We

:10:36.:10:41.

have worked very hard, the last couple of days, to keep control of

:10:41.:10:47.

things, going on in Greece. To make clear we are still committed to the

:10:47.:10:49.

rescue package that was agreed in Brussels. There are some things

:10:50.:10:53.

that you can't control, which is what's happening in the Athens

:10:53.:10:57.

parliament, there are some things you can control, which is where the

:10:57.:11:02.

money comes from the bailout, the G20 has dolg done nothing to agree

:11:02.:11:06.

that - has done nothing to agree that? We are organising the money

:11:06.:11:11.

in the most efficient way. There was one diversion of opinion as far

:11:12.:11:17.

as the involvement of the ECB is concerned. From a German point of

:11:17.:11:22.

view we have always maintained this is a sovereign debt crisis, and we

:11:22.:11:26.

can't cure it by creating more sovereign debt. Why did Angela

:11:26.:11:32.

Merkel walk out early, China said no, the ECB is refusing to do it,

:11:32.:11:36.

that is surely the simplest answer to this? It is not. We have managed

:11:36.:11:41.

to establish very impressive amounts of money in the European

:11:41.:11:44.

financial support facility, we have agreed last week on some

:11:44.:11:49.

instruments to leverage it, in order to use it more efficiently,

:11:49.:11:53.

and now we have a serious debate with the IMF. This could be over if

:11:53.:11:57.

the ECB stepped in. If a European Central Bank is not prepared to

:11:58.:12:03.

bail out a European problem, what's it for? The problem is, however,

:12:03.:12:10.

that if the ECB would do it, we would be ready to generate an

:12:10.:12:14.

unlimited amount of money, potentially. This would be in

:12:14.:12:17.

contradiction to our stability philosophy. What we have learned

:12:17.:12:21.

from the crisis is that states have spent too much money over the last

:12:21.:12:30.

30 years, and now we cannot answer it by inspiring inflation by the

:12:30.:12:34.

ECB. That is why you need the Central Bank to step in?

:12:34.:12:39.

Central Bank can't step in this very moment, that is why we have

:12:39.:12:44.

created the European financial support facility. What do you bring

:12:44.:12:48.

to this problem, what would you do with it? I think while I have a lot

:12:48.:12:52.

of respect for the work that Peter does, I would disagree with the

:12:52.:12:58.

point that he makes, that the EFSF brought an impressive amount of

:12:58.:13:03.

money. The thing about the summit, the eurozone summit that was held

:13:03.:13:08.

last week, was that not a single new additional cent was committed

:13:08.:13:12.

by eurozone countries. The idea there was you take the money

:13:12.:13:15.

already committed and you go out into the markets, or go to the

:13:15.:13:21.

Chinese and you get them to lend you four or five times what you

:13:21.:13:24.

yourself committed, without recourse to the stronger countries.

:13:24.:13:27.

So everybody is meant to do what the eurozone countries are not

:13:27.:13:31.

prepared to do themselves, which is lend to the weaker countries with

:13:31.:13:35.

no recourse to the stronger countries. China was right to say

:13:35.:13:39.

no? I think China was right to say no in some forms. There was a very

:13:40.:13:45.

sensible proposal put forward, to be discussed at the G20, for SDRs,

:13:45.:13:50.

to be lent to the EFSF, and that was, in fact, blocked by Germany,

:13:50.:13:54.

because they didn't want to lend any more one to the EFSF. Briefly

:13:54.:13:59.

to come back on that point? We have made a strong commitment to our

:13:59.:14:04.

national parliament, that there is a limit of 211 billion euro, to be

:14:04.:14:09.

lent to the EFSF, by Germany. This is an incredible amount of money to

:14:09.:14:14.

support other countries. This is a very clear indication by our

:14:14.:14:18.

parliament that we have to find a solution to the crisis, together.

:14:18.:14:22.

There are other countries in Europe, like the UK, we are all affected,

:14:22.:14:27.

if this crisis gets out of control. Therefore, we have to prove

:14:27.:14:30.

solidarity, it is a global crisis, we have to provide a global

:14:30.:14:37.

solution to it. Let's talk to Bill Rhodes, a global solution,

:14:37.:14:40.

President Obama was shaking his head at the prospect of the IMF to

:14:40.:14:44.

be involved. Is this your problem and Europe should find the

:14:44.:14:48.

solution? We have to remember that the markets are more interlinked

:14:49.:14:52.

than ever. What happens in Europe and Greece affects the rorld

:14:52.:14:55.

markets. The Chinese are very interested in what happens, because

:14:56.:14:59.

the largest export market is Europe. What they are concerned about is

:14:59.:15:04.

how any money that they may put forward would be used. I think the

:15:04.:15:08.

IMF is the vehicle, the anchor, that was the anchor for us in the

:15:08.:15:14.

Latin American debt crisis, the Asian financial crisis, the

:15:14.:15:18.

problems with Turkey in 2001 what I would like to see is a trust fund

:15:18.:15:21.

set up, not just for southern Europe, but we have to remember the

:15:21.:15:27.

problems of northern Africa and elsewhere. And make the IMF the

:15:27.:15:30.

anchor again. What is very important that comes out of Greece

:15:30.:15:33.

is a Government that is unified, and can implement the programme

:15:33.:15:40.

that my colleagues are talking with about, if you cannot get a

:15:40.:15:43.

Government that can convince its own people to move forward and

:15:43.:15:47.

implement this programme, then we have a problem that is bigger than

:15:47.:15:50.

we perceive now. Let me ask you, we are treating George Papandreou,

:15:50.:15:55.

some people are treating Papandreou like he's a bit of a ranting

:15:55.:16:00.

lunatic. What if the whole thing was perfectly orchestrated to get a

:16:00.:16:04.

better deal from the banks, is that conceivable? I think what he's

:16:04.:16:10.

trying to do is to try to get some sort of a Government, whether he be

:16:10.:16:14.

involved as Prime Minister, or a unity Government, or even a

:16:14.:16:19.

Government with someone like Lucas Papademos, a former vice-president

:16:19.:16:22.

of the European Central Bank, that can carry forth this programme. I

:16:22.:16:25.

think he should have done it earlier. As far as the banks go, I

:16:25.:16:29.

think it is very important, and the stability fund has to move on this

:16:29.:16:35.

very rapidly s to support and recapitalise the Greek banks.

:16:35.:16:38.

Greece has gone through three years of negative growth, and projected

:16:38.:16:42.

to go into a fourth. You can't expect a people of the country to

:16:42.:16:47.

move forward if they don't see growth. The key to growth as far as

:16:47.:16:51.

the economy goes, right now, in Greece, is the banking system. I

:16:51.:16:55.

think one of the first measures that has to be taken by this newly

:16:55.:17:00.

constituted stability fund, is to help recapitalise the Greek banking

:17:00.:17:03.

system. How long can this kind of instability go on for? It really

:17:03.:17:08.

worries the longer it goes on. The first reason is, it costs more.

:17:08.:17:13.

Actually what would have been a 200 or 300 billion euro problem, is now

:17:13.:17:17.

a one or two trillion euro problem of the people who will pay the

:17:17.:17:21.

price of that are real people losing their jobs, investors are

:17:21.:17:24.

too frightened and nervous to put in money and create jobs and

:17:24.:17:28.

employment. Who do you think is the biggest obstacle for this, do you

:17:28.:17:33.

think it is on the Greek side or the lack of leadership in Europe?

:17:33.:17:36.

Greece is 2% of the eurozone economy. That is something we have

:17:36.:17:39.

to remember, and we have to talk about the real problem as well,

:17:39.:17:44.

which is Italy. Italy is too big to fail. There isn't a firewall of

:17:44.:17:48.

sufficient liquidity that has been created to help Italy, and 200

:17:48.:17:51.

billion euros from Germany is not sufficient for that purpose. The

:17:51.:17:55.

second thing is, it is Italy's fault, because they need to get

:17:55.:18:02.

serious about reform. You need reform to, and you need liquidity

:18:02.:18:06.

to bridge yourself to the reform, those two things. What is Germany

:18:06.:18:12.

scared of here, is it a very emotional atavistic response thaw

:18:12.:18:17.

don't want to be seen as the dominating force in Europe? On the

:18:17.:18:22.

one hand we are prepared to prove solidarity. European integration is

:18:22.:18:27.

a very emotional thing to us, it means the happiest years of German

:18:27.:18:31.

history, the last 60 years, without devastating wars. Therefore, we are

:18:31.:18:36.

prepared to provide the highest amount of money ever provided by a

:18:36.:18:39.

sovereign country in order to help and support others. The second

:18:39.:18:47.

point is, Germany has suffered twice from a devastating inflation.

:18:48.:18:50.

That was the last 100 years. Therefore stability means something

:18:51.:18:56.

to us emotional. We tried to combine both of those approach, on

:18:56.:18:59.

the one hand solidarity and the other stability. As you have

:18:59.:19:03.

mentioned, we have to build firewalls, we have to prove

:19:03.:19:06.

solidarity. But we need these reforms, and for the time being,

:19:07.:19:15.

neither in Italy, nor in Greece, unfortunately, there is a clear

:19:15.:19:19.

commitment that will reform and encourage markets and remove doubts.

:19:19.:19:23.

This is where we have to provide loadership France and Germany

:19:23.:19:27.

together. I completely agree about the need for reform. The single

:19:27.:19:30.

biggest thing to change the European crisis is Italy being

:19:30.:19:34.

prepared to reform and Berlusconi being prepared to leave. However,

:19:34.:19:38.

why do you deny yourself the capacity to provide the liquidity,

:19:38.:19:42.

even if you don't give it to them until they reform. By saying you

:19:42.:19:46.

are not prepared to have that much capacity to provide liquidity, you

:19:46.:19:51.

are spooking the markets, that is the real problem? It is a clear

:19:51.:19:54.

argument, we have an mechanism to provide the money. If we increase

:19:54.:20:00.

the money to the fund, France would lose its triple A Tate tus as the

:20:00.:20:04.

next country. As soon as - status, as the next country. Conditions

:20:04.:20:14.
:20:14.:20:14.

France loses it then what. Go to the IMF. Can I get a word in

:20:14.:20:18.

edgeways. That is right in the epbs of timing, we have to get on and

:20:18.:20:22.

get it done, this contagion can spread even further than we are

:20:22.:20:28.

seeing. It is starting to affect markets worldwide, even in Asia. We

:20:28.:20:34.

need to get on and get it done. That is why I suggested the role of

:20:34.:20:42.

the IMF as Anwar chore and help. - as an anchor, first help is Belo in

:20:42.:20:47.

to be monitored. We will pick up with that - Berlusconi in to be

:20:48.:20:51.

monitored. We will pick that up soon. Give us

:20:51.:20:55.

a sense Mark of what people in Greece think George Papandreou's

:20:55.:21:05.
:21:05.:21:07.

game plan has been in the saga? need wait no longer. We have heard

:21:07.:21:10.

news, the votes are counted and he scraped home. We know Eva Kaili,

:21:10.:21:14.

the MP from his party, that we have seen in our reports last night, for

:21:14.:21:19.

example, she was a doubter, she voted with him. The interesting

:21:19.:21:27.

question is, is he still in the driving seat of his party? If he

:21:27.:21:32.

can carry on, put together a caretaker Government, then he may

:21:32.:21:36.

just last a little longer. But most people think that the price of

:21:36.:21:40.

getting this vote has been to promise he will go, that now looks

:21:40.:21:45.

increasingly inevitable. Thank you very much. Now a quick

:21:46.:21:51.

reaction here, so he stays,'s won that vote, does that make things

:21:51.:21:55.

simpler or more complicated? In the short-term it makes it simpler.

:21:56.:21:58.

There is one vote that really counts, I don't think it really

:21:58.:22:02.

matters about the internal politics of groz, they have to vote to

:22:02.:22:05.

accept - Greece, they have to vote to accept the terms of the package,

:22:05.:22:09.

and then get the funding and not default. That is the important

:22:09.:22:13.

point, that has to be done after the vote of confidence. We know the

:22:13.:22:18.

Greek electorate have, 90%, have no faith at all in the politicians at

:22:18.:22:22.

the moment. Does it matter if he stays or goes? It matters if they

:22:22.:22:27.

are able to form a cross-party Government of National Unity. That

:22:27.:22:31.

is what they should do, and the Government of National Unity should

:22:31.:22:35.

engage in an undoubtful commitment to implement this reform package.

:22:35.:22:39.

It would be a strong signal to the markets. Then if we would have what

:22:39.:22:42.

you described for Italy, it could be the second step, then we could

:22:42.:22:47.

try to reorganise the process in the convincing way. Do you think

:22:47.:22:51.

the specter of global recession has been pushed back in these last few

:22:51.:22:57.

minutes, because of that? I don't think so. It is not sufficient

:22:57.:23:04.

because, as I said, Greece is really small in the scale of things.

:23:04.:23:08.

Global recession is still a threat, and therefore, we have a joint

:23:08.:23:14.

responsibility to take on the challenge. We are going to to go

:23:15.:23:20.

back to Paul in Cannes. Just ask him, Paul, you have heard the vote

:23:20.:23:24.

come in now from Greece, Papandreou has scraped through, it would be

:23:24.:23:30.

too soon to get any reaction there, what are your first thoughts?

:23:30.:23:34.

scrapes through the vote. He still has an economy to run. As I

:23:34.:23:37.

understand it, listening to the debate there in the Greek

:23:37.:23:41.

parliament, as it was happening, as from the translation, it appeared

:23:42.:23:46.

at one point in his rather long speech, he said if we now have an

:23:46.:23:50.

election, our banks will have a run on them, and they will go bust.

:23:50.:23:54.

That is quite a thing for a Prime Minister to say in a life-saving

:23:54.:23:59.

speech. But let's start from that assertion. The Greek banking system,

:23:59.:24:06.

is, effectively, bust, unless the EFSF deal comes through and saves

:24:06.:24:10.

it. We have heard tonight that the Cypriot banking, the Cypriot

:24:10.:24:14.

Government and state is downgraded again. But the Greek banking system

:24:14.:24:22.

needs to be saved. The dynamics in Greece are not just political, as

:24:22.:24:25.

we heard throughout the programme, they are also economic. Every day

:24:25.:24:31.

that goes by, without a political settlement, does increase the

:24:31.:24:35.

economic pressure, both on the Greek banks, the Greek sovereignty.

:24:35.:24:40.

Remember, this week, the IMF and everybody said, you are not getting

:24:40.:24:43.

the money, because of this referendum stunt. That, as far as

:24:43.:24:47.

we know, is still the case. That money has not been given yet. It

:24:47.:24:51.

needs to be given, in order for Greek civil servants draw their

:24:51.:24:56.

wages and for the lights, illuminating the Acropolis, to stay

:24:56.:24:59.

on. That is the situation Papandreou is in. That is the

:24:59.:25:03.

situation his economy is in. I think winning the vote is one thing.

:25:03.:25:07.

I'm steering that very trouble - steering that troubled economy,

:25:07.:25:12.

without it blowing up Italy, which is equally troubled, will be the

:25:12.:25:16.

next task of those two Governments. Thank you very much indeed. We're

:25:16.:25:21.

going to talk now to someone who knows the Greek Prime Minister well,

:25:21.:25:24.

Herakles Polemarchakis, thank you very much for coming in. I know you

:25:24.:25:28.

have just joined us as the vote was read out. I can tell you all the

:25:28.:25:30.

300 members of the parliament support the Government, but the

:25:30.:25:34.

question is whether Papandreou's term as Prime Minister close to the

:25:34.:25:41.

end? You know him well, what do you think is going on here? I heard the

:25:41.:25:47.

remarks before the vote, if I interpret correctly what he said,'s

:25:47.:25:53.

going to meet with the President tomorrow and discuss the formation

:25:53.:25:59.

of a Government of National Unity. He explicitly, or almost explicitly

:25:59.:26:05.

said that this would not need to include him as Prime Minister.

:26:05.:26:09.

you think he will be gone by the end of the month? It is a guess,

:26:09.:26:12.

but yes. What was going on this week, the call for the referendum,

:26:13.:26:16.

the suggestion he was going to step down yesterday, he didn't, then the

:26:16.:26:20.

referendum was gone by the night, what was all that about? Let me

:26:20.:26:24.

make a side remark. Asking him to step down yesterday would have been

:26:24.:26:32.

very bad. Under pressure? Don't forget, his grandfather, with the

:26:32.:26:36.

same name, was elected Prime Minister on the 3rd of November, 48

:26:36.:26:41.

years ago. So the 3rd of November would have been a very bad day to

:26:41.:26:46.

ask him to step down. But leaving this aside, let's talk about the

:26:46.:26:54.

referendum, it was a flawed move. That is clear. Why was it flawed,

:26:54.:26:59.

because it introduced the specter of uncertainty for two months at

:26:59.:27:02.

that time when world markets, Europe, and groz in particular,

:27:02.:27:06.

could least afford it - Greece in particular, could least afford it.

:27:06.:27:10.

At the same time it compromised the credibility of Papandreou himself,

:27:10.:27:17.

with his European partners, because the reaction that we got implied

:27:17.:27:21.

that they had not been warned of the move. Don't forget our

:27:21.:27:25.

credibility was one of his strong points, vis a vis his predecessor

:27:25.:27:32.

and other politicians. Sorry to interupt, now, who do you think is

:27:32.:27:37.

running Greece? We have heard from our guests that in something like

:27:37.:27:40.

this, time is of the essence, and it gets more expensive by the day

:27:40.:27:47.

for every day it is lost? This is true. My hope is that this vote of

:27:47.:27:52.

confidence will not be in an opportunity to try and roll back

:27:52.:27:56.

the tape to where we were a week ago, or a few months ago, but it

:27:56.:28:00.

would be the first step in the formation of a national unity

:28:00.:28:05.

Government, it is exactly what the country needs. It is the only

:28:05.:28:08.

Government, the only kind of Government that can produce the

:28:08.:28:13.

commitment and the clarity that European partners need from Greece.

:28:13.:28:17.

A momentous week, and pretty hard, in way, to write the headlines that

:28:17.:28:20.

make sense. What do you think European leaders, G20 leaders will

:28:20.:28:25.

be making of this news, does this suggest that leadership is back or

:28:25.:28:28.

it has gone completely? I think they will be relieved in the short-

:28:28.:28:32.

term. They would actually be doing the wrong thing by being relieved.

:28:32.:28:37.

As I say, you have to still win the vote that agrees the conditionality

:28:37.:28:42.

on the package, that therefore allows money to be dispersed, and

:28:42.:28:46.

ensures there isn't a default that is disorderly, that will lead to a

:28:46.:28:50.

run on the banks, and will lead to chaos across the European banking

:28:50.:28:54.

system and have contagion to other countries. Actually, Greece that is

:28:54.:28:59.

to deliver a commitment to reform. Do you think that Greece will

:28:59.:29:03.

accept the bailout first, and do you think it will be able to

:29:03.:29:08.

reform? I'm today much more optimistic than I have been last

:29:08.:29:10.

week. After this announcement of the referendum there was a serious

:29:10.:29:19.

debate, not only in Europe, but also in Greece. May guess now is

:29:19.:29:26.

that the increase is aware of the risk and the responsibility.

:29:26.:29:31.

We have a short preview of next week on Newsnight. Our science

:29:31.:29:36.

editor will report on the dramatic advances being made in how we

:29:36.:29:39.

understand and treat mental illnesses.

:29:39.:29:44.

For decades mental illness has been beyond our understanding. Now

:29:44.:29:47.

scientists think we are on the verge of a revolution. This is what

:29:47.:29:52.

it is all about, the human brain. Scientists are beginning to

:29:52.:29:57.

understand how the brain works and what makes it go wrong.

:29:57.:30:02.

That's all from Newsnight tonight. Bonfire Night might feel a bit

:30:02.:30:08.

different this weekend, Guy Fawkes's face, as reimagined in V

:30:09.:30:15.

For vendetta, has stopped being the face of a failed 17th century

:30:15.:30:21.

terrorist, and into the mask of the Occupy movement. Remember, remember

:30:21.:30:27.

the 5th of November, gunfire, treason, plot, I see no reason why

:30:27.:30:34.

gun power treason should ever be forgot. Guy fauk, guy fauks, it was

:30:34.:30:40.

Presented by Emily Maitlis.

Greece's economic future is on a knife-edge as Greek PM George Papandreou faces a confidence vote in parliament. Newsnight assesses the repercussions.


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