News / Europe

    World Stocks Plunge on Call for Greek Debt Plan Vote

    Henry Ridgwell

    Greece has sent shockwaves across Europe by calling a referendum on the latest bailout deal. It means there's a big chance that the deal to save the euro currency - agreed to much fanfare in Brussels last week - could be sunk if the Greek people vote against accepting the terms of the bailout. 

    The Acropolis monument looming over Athens is a constant reminder of this country’s ancient heritage.

    Greece is known as the birthplace of democracy.

    And it is the Greek people who will now decide their own economic fate - which will have consequences for the entire eurozone.

    Prime Minister George Papendreou shocked politicians in Athens and beyond, by declaring a referendum on a new EU bailout.

    Parliament will also hold a confidence vote in the government this Friday.

    “This is the highest form of democracy, it is a great moment of patriotism for the citizens to decide, so let us then give the final word to the people and let the citizens decide," said Papendreou.

    In recent months, waves of strikes and protests against austerity measures have crippled Greek cities.

    The latest EU aid package would see further public sector pay and pension cuts and tax rises, designed to reduce Greek debt.

    Opinion polls suggest over half of Greeks disapprove - meaning a ‘no’ vote in the referendum is a real possibility.

    Political journalist Kostas Raptis says Greeks are increasingly turning against the European Union.

    “It’s a very imbalanced relationship economically. And now politically as well. I mean, this sort of imbalance is now translated into the political field, with big eurozone economies dictating to the periphery countries what to do and how.”

    That has rekindled tensions with Germany, which has been driving EU demands for more Greek austerity.

    A national holiday in Greece last week to commemorate the World War II saw protesters waving anti-German flags and banners.

    Previous demonstrations have seen re-enactments of alleged Nazi war crimes.

    “Deep down some World War II animosities still survive, I suspect," said Raptis. "Many Greeks complain about the damages inflicted on our country during the war and about the need for proper German reparations.”

    In public European leaders put on a show of unity. But the referendum is likely to strain relations.
    .
    "If it goes well he of course has the support of the Greek people," said Joerg Rocholl, President of the European School of Management in Berlin. "If not, it could lead to a situation where Greece can no longer remain a member of the euro zone".

    If Greeks vote ‘no’, analysts say there’s no obvious alternative other than for Greece to default or leave the euro.

    After a few days of relative calm - Europe has been plunged back into political and economic uncertainty.

    World stock markets plummeted Tuesday on Greece's call for a referendum on the European debt-relief agreement, while the continent's leaders scrambled about how to react to the surprise development.

    Asian indexes fell sharply, and European stocks plunged. Markets in Paris and Frankfurt slid more than four percent in afternoon trading, with U.S. indexes falling about two percent.  Stocks of banks holding Greek debt were especially hard hit.

    European Union leaders Herman Van Rompuy and Jose Manuel Barroso said they "fully trust" Greece to uphold last week's eurozone debt-relief agreement. It forgives $140 billion in Greek debt, in exchange for the Athens government carrying out widespread austerity measures that have angered many Greeks, as well as boosting the continent's bailout fund for future emergencies.

    But other European leaders and financial analysts said they were shocked when Greek Prime Minister George Papandreou late Monday called for the referendum, which could be held early next year. Several said a Greek vote against the debt-relief agreement would amount to Greece deciding to leaving the bloc of 17 nations that use the euro currency and lead to new turmoil on world financial markets.

    World Bank president Robert Zoellick said it "could be a positive signal" if Greece votes for the debt agreement, but warned that if it is rejected, "it's going to be a mess."

    Ireland's European affairs minister Lucinda Creighton said the referendum was a grenade thrown into the continent's financial turmoil just days after many thought European leaders had acted decisively to calm fears about a Greek default on its obligations. She said that "legitimately there is going to be a lot of annoyance" about the referendum plan.

    French President Nicolas Sarkozy and German Chancellor Angela Merkel said they would meet Wednesday in Cannes, France with leaders from the International Monetary Fund (IMF) and Greece to discuss the latest snag in solving the continent's debt crisis. The Group of 20 leaders of the world's biggest and emerging economies are headed to Cannes for a summit on Thursday and Friday. Economic issues are at the center of the summit's agenda, including the European debt crisis, and fears that it could spawn a new worldwide recession.

    Papandreou has been a staunch supporter of the plan to cut Greece's debt, while binding his country to years of austerity measures. But Papandreou told ruling Socialist party members in Parliament that the "command of the Greek people will bind us." He said if the Greek people do not want it, the plan will not be adopted.

    European and world leaders have praised the adoption of the plan aimed at cutting Greek debt and calming world financial markets worried about a Greek default. The agreement also forces European banks to increase their cash reserves and boosts the bailout fund.

    But the Greek people for months have recoiled at the tax increases and spending cuts the Athens government has been forced to adopt to satisfy its international creditors. They have staged repeated strikes in protest, some of them violent.

    One Greek survey showed 60 percent of those questioned took a negative view of the Brussels agreement, reached in the middle of the night last Thursday.

    The Greek leader's call for a referendum came as new reports in Europe show that the economic fortunes of the 17 eurozone nations are markedly weakening, with higher unemployment and diminished growth prospects for 2012. Until Monday, there had been no suggestion of a referendum on the plan.

    The Paris-based Organization for Economic Cooperation and Development (OECD) predicted that collectively the economies of the bloc of countries that use the euro will virtually stall in 2012, with some of them sliding into a recession. The agency projected growth of only three-tenths of one percent, less than a sixth of the 2 percent growth that was projected just five months ago.

    You May Like

    US Leaders Who Served in Vietnam War Look Back and Ahead

    In New York Times opinion piece, Secretary of State John Kerry, Senator John McCain and former Senator Bob Kerrey say as US strengthens relations with Vietnam, it is important to remember lessons learned from war

    Who Are US Allies in Fight Against Islamic State?

    There is little but opportunism keeping coalition together analysts warn — SDFs Arab militias are not united even among themselves, frequently squabble and don’t share Kurds' vision for post-Assad Syria

    Learning Foreign Language Helps US Soldiers Bridge Culture Gap

    Effective interaction with local populations part of everyday curriculum at Monterey, California, Defense Language Institute

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Vietnamese-American Youth Optimistic About Obama's Visit to Vietnami
    X
    Elizabeth Lee
    May 22, 2016 6:04 AM
    U.S. President Barack Obama's visit to Vietnam later this month comes at a time when Vietnam is seeking stronger ties with the United States. Many Vietnamese Americans, especially the younger generation, are optimistic Obama’s trip will help further reconciliation between the two former foes. Elizabeth Lee has more from the community called "Little Saigon" located south of Los Angeles.
    Video

    Video Vietnamese-American Youth Optimistic About Obama's Visit to Vietnam

    U.S. President Barack Obama's visit to Vietnam later this month comes at a time when Vietnam is seeking stronger ties with the United States. Many Vietnamese Americans, especially the younger generation, are optimistic Obama’s trip will help further reconciliation between the two former foes. Elizabeth Lee has more from the community called "Little Saigon" located south of Los Angeles.
    Video

    Video First-generation, Afghan-American Student Sets Sights on Basketball Glory

    Their parents are immigrants to the United States. They are kids who live between two worlds -- their parents' homeland and the U.S. For many of them, they feel most "American" at school. It can be tricky balancing both worlds. In this report, produced by Beth Mendelson, Arash Arabasadi tells us about one Afghan-American student who seems to be coping -- one shot at a time.
    Video

    Video Newest US Citizens, Writing the Next Great Chapter

    While universities across the United States honor their newest graduates this Friday, many immigrants in downtown Manhattan are celebrating, too. One hundred of them, representing 31 countries across four continents, graduated as U.S. citizens, joining the ranks of 680,000 others every year in New York and cities around the country.
    Video

    Video Vietnam Sees Strong Economic Growth Despite Incomplete Reforms

    Vietnam has transformed its communist economy to become one of the world's fastest-growing nations. While the reforms are incomplete, multinational corporations see a profitable future in Vietnam and have made major investments -- as VOA's Jim Randle reports.
    Video

    Video Qatar Denies World Cup Corruption

    The head of Qatar’s organizing committee for the 2022 World Cup insists his country's bid to host the soccer tournament was completely clean, despite the corruption scandals that have rocked the sport’s governing body, FIFA. Hassan Al-Thawadi also said new laws would offer protection to migrants working on World Cup construction projects. VOA's Henry Ridgwell reports.
    Video

    Video Infrastructure Funding Puts Cambodia on Front Line of International Politics

    When leaders of the world’s seven most developed economies meet in Japan next week, demands for infrastructure investment world wide will be high on the agenda. Japanese Prime Minister Shinzo Abe’s push for “quality infrastructure investment” throughout Asia has been widely viewed as a counter to the rise of Chinese investment flooding into region.
    Video

    Video Democrats Fear Party Unity a Casualty in Clinton-Sanders Battle

    Democratic presidential front-runner Hillary Clinton claimed a narrow victory in Tuesday's Kentucky primary even as rival Bernie Sanders won in Oregon. Tensions between the two campaigns are rising, prompting fears that the party will have a difficult time unifying to face the presumptive Republican nominee, Donald Trump. VOA national correspondent Jim Malone has more from Washington.
    Video

    Video Portrait of a Transgender Marriage: Husband and Wife Navigate New Roles

    As controversy continues in North Carolina over the use of public bathrooms by transgender individuals, personal struggles with gender identity that were once secret are now coming to light. VOA’s Tina Trinh explored the ramifications for one couple as part of trans.formation, a series of stories on transgender issues.
    Video

    Video Amerikan Hero Flips Stereotype of Middle Eastern Character

    An Iranian American comedian is hoping to connect with American audiences through a film that inverts some of Hollywood's stereotypes about Middle Eastern characters. Sama Dizayee reports.
    Video

    Video Budding Young Inventors Tackle City's Problems with 3-D Printing

    Every city has problems, and local officials and politicians are often frustrated by their inability to solve them. But surprising solutions can come from unexpected places. Students in Baltimore. Maryland, took up the challenge to solve problems they identified in their city, and came up with projects and products to make a difference. VOA's June Soh has more on a digital fabrication competition primarily focused on 3-D design and printing. Carol Pearson narrates.

    Special Report

    Adrift The Invisible African Diaspora