With apologies to Moochin, here’s the real POTD [of the week? – Ed] when the Greek Prime Minister, George Papandreou, had his card marked at Cannes by Frau Bundeskanzlerin. Via Daniel Hannan at the Telegraph blog.
Italy have called in the International Monetary Fund (IMF), but no money has changed hands, according to Berlusconi…
Answering questions at a press conference in Cannes this afternoon, Mr Berlusconi said he had no intention of resigning and did not believe his time in government was coming to an end.
Nobody else could authoritatively represent Italy overseas, Mr Berlusconi said, adding that deputies who abandoned his administration would be betraying the country at a time of crisis.
He said he has a solid majority in parliament and sees no need for an interim “technical government”.
Economy minister Giulio Tremonti, long a thorn in Mr Berlusconi’s side, refused to answer directly answer a question on whether he shared the embattled premier’s view on the survival of his government, saying he had nothing to add.
Earlier, European Commission president Jose Manuel Barroso confirmed Italy had asked the IMF to monitor implementation of its reform commitments.
“Italy has decided on its own, on its own initiative, to ask the IMF to monitor implementation of Italy’s commitments. I see this as evidence of how important Italy’s reform process is for the country and for the euro zone as a whole,” Mr Barroso told a news conference at the G20 summit in Cannes on the French Riviera.
He said the European Commission would also assess the situation in Italy. “The European Commission will go ahead with detailed assessment and monitoring of the Italian situation. Next week we will already go to Italy to make this kind of assessment.”
At a news conference in Cannes on the French Riviera, Dr Merkel said G20 leaders have reaffirmed debt and deficit goals as a stable euro area was in all their interests. However, she said the leaders failed to agree on boosting the European Financial Stability Facility (EFSF)
She said they set a framework for IMF cooperation with Europe but “hardly any countries in the G20” had shown willingness to inject more money into the European bailout fund.
European leaders had hoped to entice China and other wealthy countries to invest in a special purpose vehicle, but their leaders said they needed more detail on how the system would work before deciding.
No figures were agreed on the IMF but the boost to resources, mostly from large emerging countries such as China, could be in the range of $300-350 billion, G20 officials said.
The consensus view elsewhere is that something of significance has already happened. As BBC Europe editor Gavin Hewitt points out
That said, there is a downside to the referendum being scrapped.
The sensitive issue of outsiders dictating policy to Greece will remain unresolved. Most of the population will still resent the cuts and spending increases. It will prove almost impossible to meet targets.
Ten years of austerity, which lie ahead, will test the fabric of this society. Growth will remain elusive and a basic truth will remain unanswered – that the German and Greek economies are so different it is hard to see them successfully being part of the same currency union.
So the leaders meeting in Cannes have shown their harsher face.
At the same time they are about to boost the firepower of the IMF. The British position is that they want the fund strengthened, but not to bailout the eurozone.
But that is precisely what some other countries want. They see the IMF as a key weapon to be used if Italy and Spain get into difficulty.
It is hard to see how the UK will ensure that any increased contribution does not end up propping up eurozone countries. There is a very real prospect that despite all the denials the UK will end up contributing to the bailout via the IMF.
But the story of the week so far is not the machinations in Greece; it is that the eurozone’s leaders accept that it may be better for some countries to leave. [Added emphasis]
Papandreou will discover his immediate fate in the no confidence vote today.
And from Arthur Beesley in the Irish Times
With all of that in mind, it is no surprise that Europe’s leaders would much prefer to keep the euro zone together. The only feasible means of exit within the treaties as they stand is for a country to leave the EU outright. Still, it is not beyond the bounds of imagination for the EU powers to bend the rules.
For all the tens of billions of euro they have lent to Greece, Ireland and Portugal, Europe’s fabled “no-bailout clause” remains in place. For some European leaders, the clear preference is for Greece to scrap the referendum, as Papandreou has now indicated, and form a “unity government” which pledges to execute the EU-IMF deal.
Such an administration would enact a swingeing budget for 2012, in line with the rescue pact, before calling an election. This would liberate the €8 billion loan that euro zone leaders and the IMF blocked on Wednesday night, giving Greece a final opportunity to avert bankruptcy while its people think long and hard about their future and the leaders they choose.
At the time of writing, the Greek opposition New Democracy party has pledged support for the bailout package and would like a transition government leading to early elections. But Papandreou will agree to neither, it seems.
In modern times, as events remain fluid in Athens, the stakes have never been higher for Greece. The same goes for the euro.
Indeed. And as I may have mentioned
It’s still “the political trilemma.”
[Europe is still sexy! – Ed] Of course it is.