The Star Online: World Updates
The Star Online: World Updates |
- Deal on Greek premier collapses, Papademos re-emerges
- Turkey quake kills five, traps scores - state tv
- Italy at breaking point; fears grow of euro zone split
| Deal on Greek premier collapses, Papademos re-emerges Posted: REUTERS - A deal on forming a Greek national unity government collapsed as the country headed towards an economic abyss and revived early on Thursday the chances of former European Central Bank vice president Lucas Papademos heading the coalition.
Prime Minister George Papandreou said he was handing over to a coalition that does not exist and then failed to install an old-style politician and personal ally as premier. On a day that was bizarre and chaotic even by Greek political standards, Papandreou wished his successor well and headed off to meet the president -- only for it to emerge that there was no successor due to feuding in the political parties. Papademos, whose candidacy had seemed doomed, insisted that both the socialist and conservative parties sign written undertakings to support Greece's 130 billion euro bailout, as demanded by the European Union, a government source said. The outgoing prime minister had agreed to the terms laid down by Papademos, who as Bank of Greece governor oversaw the country's adoption of the euro in 2002, the source added. Papademos made his demands for both major parties to back the bailout package, which includes austerity measures that are likely to prove highly unpopular, amid warnings that Europe is running out of patience with Greece and may cut a financial lifeline that the party leaders seem to take for granted. Stefanos Manos, a former finance minister, said the behaviour of Papandreou and conservative leader Antonis Samaras was undermining Greece's future in the euro and risking a possible return to the national currency. "The Europeans are sick of us. Papandreou and Samaras don't realise they will stop giving us money and we will return to the drachma," said Manos. "They are going to destroy us. These problems demand decision-making. They can't decide on anything and they are fighting like cat and dog." Greeks and the nation's international lenders have watched in growing horror for three days as party leaders feuded over a shrinking list of credible candidates to lead the national unity coalition after Papandreou's government imploded. Greece will run out of money next month unless the new government agrees emergency funding with the European Union and International Monetary Fund, Greece's last remaining lenders. LAST MINUTE SNAGS Earlier, party sources said senior members of the socialist and conservative camps had settled on the speaker of parliament, veteran socialist Filippos Petsalnikos, as the new prime minister -- barring last-minute snags. Papandreou then gave an emotional television address, supposed to be his last to the nation as premier, saying this deal had saved country's membership of the euro zone. "I am proud that, despite the difficulties, we avoided bankruptcy and ensured the country stayed on its feet," he said. "I want to wish the new prime minister success, I will support the new effort with all my strength. "Today, despite our differences -- political and social differences do exist -- we have put aside our fruitless conflict and disagreement," Papandreou said. Papandreou and Samaras then began talks with President Karolos Papoulias on the new coalition. However, before leaders of smaller parties could join them to seal the coalition, the meeting was abruptly halted. But snags had indeed emerged, with large sections of Papandreou's PASOK party and the conservative New Democracy refusing to back Petsalnikos. Party sources said some lawmakers saw him as a pawn of Papandreou. "We wanted a strong a man who could handle all the economic issues," a socialist lawmaker said. "This candidacy is so close to Papandreou's policies, it does not signal the change the Greek people wanted." The president's office said a meeting of party leaders would be held at 0800 GMT on Thursday, although in the current chaotic atmosphere political talks are often delayed or fail to happen at all. One of the few things that the parties agreed was that early elections be held on Feb. 19. However, the government sources said that Papademos had also stipulated that the coalition's life could extend beyond that date if necessary. The next government has much to do. As well as winning parliamentary approval for the bailout, it has to pass the 2012 budget and secure the latest 8 billion euro installment of Greece's original rescue that was pulled together last year, to avoid bankruptcy when big debt repayments come due in December. For its part, the European Union needs to put out the fire in Greece to prove to international financial markets that it can tackle another blaze in Italy, a far bigger economy also in economic and political crisis. Some lawmakers backed a return to the earlier plan, which had appeared stalled, of recruiting Papademos to give the new government the credibility that politicians lost long ago. "The only solution is Papademos. If he accepts by tomorrow morning we will be able to form a strong government that will pull the country out of the crisis," socialist lawmaker Spyros Vougias told Reuters. Papandreou discussed a Papademos candidacy late on Wednesday with Samaras, and urged the conservative leader to contact the former ECB policymaker, a government official said. GREEKS WANT EUROS -- IN CASH Bank of Greece governor George Provopoulos made a rare intervention in Greek politics on Wednesday. "The uncertainty is hurting the economy and the banking system," Provopoulos told Reuters. "There must be a strong government that will work hard to ensure the country's future in the euro zone." Greeks have pulled their savings from banks over the past week because of the deepening political crisis and fear of an exit from the euro, banking sources said. They withdrew as much as 5 billion euros -- nearly 3 percent of total deposits -- after Papandreou's shock call last week for a referendum on the euro zone bailout, said one banker, who declined to be named. "Many people withdrew their money from banks on Thursday and Friday and money couriers had a hard time supplying banks with cash to satisfy the emergency demand," said another banking source, who also requested anonymity. Papandreou provoked uproar with the plan, due to the likelihood voters would have rejected the package, pushing Greece into bankruptcy and casting doubt on its future in the euro. Under intense pressure from home and abroad, he backed down but was forced to make way for the unity coalition. Many wealthy Greeks moved their money into foreign banks last year as the crisis deepened. Now other people are demanding sometimes large amounts in euro banknotes, fearing that any bank savings might be converted into devalued new drachma if Greece is forced to revert to its national currency. "We got to the point where customers ordered amounts of up to 600,000 to 700,000 euros in cash to take home -- unbelievable," the first banker said. (Additional reporting by Harry Papachristou, Lefteris Papdimas, George Georgiopoulos; and Angeliki Koutantou; Writing by David Stamp; Editing by Jon Hemming) Copyright © 2011 Reuters Full content generated by Get Full RSS. | ||
| Turkey quake kills five, traps scores - state tv Posted: VAN, Turkey (Reuters) - An earthquake in eastern Turkey killed at least five people and scores more were trapped under the rubble of two hotels and a dozen other buildings, state television said on Thursday, less than three weeks after another killed 600 in the same area.
The magnitude 5.7 earthquake struck 16 km (9 miles) south of the city of Van at 1923 GMT on Wednesday, the U.S. Geological Survey said. The tremor destroyed at least seven buildings, including two hotels in Van city, and around 14 other structures in other parts of the region, state television channel TRT said. It said at least 100 people may still be trapped under the rubble of collapsed buildings with one reporter saying up to 70 people may have been staying at one of the hotels. Twenty one people have so far been rescued alive from the rubble of the two hotels, TRT said. Rescue workers pulled a Japanese woman to safety from the rubble of the Bayram Hotel almost six hours after the quake, state-run Anatolian news agency reported. Miyuki Konnai was part of a rescue and relief team sent to Van from Japan after the first quake. She was found injured but conscious and could be seen talking to her rescuers as she was carried to an ambulance. Television footage showed panicked people running through the streets of Van and ambulances rushing through the city with their sirens wailing. Medical staff treated one unconscious person lying on an ambulance stretcher. Wednesday's earthquake comes after a 7.6 magnitude tremor hit just northeast of Van on Oct. 23. There have been hundreds of aftershocks since and thousands of people are still camping out in tents in freezing conditions. Foreign Minister Ahmet Davutoglu, who had been in the nearby town of Ercis at the time of the quake on Wednesday, went to the crisis coordination centre in Van, Anatolian said. Ercis was the worst hit area in last month's quake. Around 30 ambulances stationed in Ercis were sent to Van in the wake of the tremor. Ercis is some 60 km north of Van. Five planes were to fly to the region carrying search and rescue teams, Anatolian said. Other rescue teams were travelling to the quake zone from the nearby provinces of Mus and Agri. Deputy Prime Minister Besir Atalay and Health Minister Recep Akdag were also preparing to travel to the region, state television said. Turkey is criss-crossed with seismic faultines and experiences small tremors nearly every day. Some 20,000 people were killed by two large earthquakes in western Turkey in 1999. (Additional reporting by Daren Butler in Istanbul and TV crew in Van; Writing by Jonathon Burch; Editing by Louise Ireland) Copyright © 2011 Reuters Full content generated by Get Full RSS. | ||
| Italy at breaking point; fears grow of euro zone split Posted: ROME/BERLIN (Reuters) - Italian borrowing costs reached breaking point on Wednesday after Prime Minister Silvio Berlusconi's insistence on elections instead of an interim government threatened prolonged instability and kindled fears of a split in the euro zone.
European Commission President Jose Manuel Barroso issued a stern warning of the dangers of splitting the zone, rocked by an escalating debt crisis. EU sources told Reuters French and German officials had held discussions on just such a move. "There cannot be peace and prosperity in the North or in the West of Europe, if there is no peace and prosperity in the South or in the East," Barroso said. Italian 10-year bond yields shot above the 7 percent level that is widely deemed unsustainable, reflecting an evaporation of investor confidence and prompting German Chancellor Angela Merkel to issue a call to arms. Merkel said Europe's plight was now so "unpleasant" that deep structural reforms were needed quickly, warning the rest of the world would not wait. "That will mean more Europe, not less Europe," she told a conference in Berlin. She called for changes in EU treaties after French President Nicolas Sarkozy advocated a two-speed Europe in which euro zone countries accelerate and deepen integration while an expanding group outside the currency bloc stays more loosely connected -- a signal that some members may have to quit the euro. "It is time for a breakthrough to a new Europe," Merkel said. "A community that says, regardless of what happens in the rest of the world, that it can never again change its ground rules, that community simply can't survive." The European Central Bank, the only effective bulwark against market attacks, intervened to buy Italian bonds in large amounts but remained reluctant to go further. Italy has replaced Greece at the centre of the crisis and is on the cusp of needing a bailout that Europe cannot afford. "Financial assistance is not in the cards," one euro zone official said, adding that the bloc was not even considering extending a precautionary credit line to Rome. Having lost his majority in a parliamentary vote, Berlusconi confirmed he would resign after implementing economic reforms demanded by the European Union, and said Italy must then hold an election in which he would not stand. He opposed any form of transitional or unity government -- which the opposition and many in the markets favour -- and said polls were not likely until February, leaving a three-month policy vacuum in which markets could create havoc. Italian President Giorgio Napolitano said there was no doubt about the resignation of Berlusconi once economic reforms were implemented by parliament within days. "Therefore, within a short time either a new government will be formed...or parliament will be dissolved to immediately begin an electoral campaign," Napolitano said. Even with the exit of a man who came to symbolise scandal and empty promises, it will not be easy for Italy to convince markets it can cut its huge debt, liberalise the labour market, attack tax evasion and boost productivity. Worries that the debt crisis could be infiltrating the core of the euro zone were reflected in the spread of 10-year French government bonds over their German equivalent blowing out to a euro era high around 140 basis points. FRUSTRATION Policymakers outside the euro area kept up pressure for more decisive action to stop the crisis spreading. Christine Lagarde, head of the International Monetary Fund, told a financial forum in Beijing that Europe's debt crisis risked plunging the global economy into a Japan-style "lost decade". "If we do not act boldly and if we do not act together, the economy around the world runs the risk of downward spiral of uncertainty, financial instability and potential collapse of global demand." Berlusconi has reluctantly conceded that the IMF can oversee Italian reform efforts. Euro zone finance ministers agreed on Monday on a road map for leveraging the 17-nation currency bloc's 440-billion-euro ($600 billion) rescue fund to shield larger economies like Italy and Spain from a possible Greek default. But there are doubts about the efficacy of those complex plans, and with Italy's debt totalling around 1.9 trillion euros even a larger bailout fund could struggle to cope. Lagarde said she was hopeful the technical details on boosting the European Financial Stability Fund (EFSF) to around 1 trillion euros would be ready by December. Many outside Europe are calling on the ECB to take a more active role as other major central banks do in acting as lender of last resort. German opposition to that remains implacable, seeing it as a threat to the central bank's independence. "The ECB will be drawn like everyone else by the weight of gravity (to act)," one euro zone official said. "CORE" ZONE DISCUSSED EU sources told Reuters German and French officials had discussed plans for a radical overhaul of the European Union that would involve establishing a more integrated and potentially smaller euro zone. The discussions among policymakers in Paris, Berlin and Brussels raise the possibility of one or more countries leaving the zone, while the core pushes to deeper economic integration. In a speech in Berlin, Barroso said Germany's gross domestic product could contract by 3 percent if the 17-member zone shrank and its economy would shed a million jobs. "What is more, it would jeopardise the future prosperity of the next generation," he said. Barroso said any push towards deeper integration should not come at the price of new divisions among EU member states. GREEK DRAMA With the markets' fire turned firmly on Italy, Greece's struggle to find a new prime minister became something of a sideshow, but one which demonstrated the difficulty in taking decisive action anywhere within the euro zone. Greek Prime Minister George Papandreou said he was stepping down without saying who would succeed him as the nation heads towards bankruptcy, but party sources said leaders had agreed it would be the speaker of parliament. Parties from left and right settled on veteran socialist Filippos Petsalnikos, barring-last minute snags, the sources said, turning to their own political class after ditching a plan to recruit a former top European Central Bank official. The socialist and conservative parties had wanted former ECB vice-president Lucas Papademos to lead a government of national unity but he appears to have made demands about his level of influence which they could not swallow. (Additional reporting by Dina Kyriakidou and Lefteris Papadimas in Athens, Emelia Sithole-Matarise, Kirsten Donovan and William James in London; Writing by Mike Peacock; Editing by Janet McBride and Andrew Roche) Copyright © 2011 Reuters Full content generated by Get Full RSS. |
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