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Greek PM defies anger; defends referendum

Athens, November 2, 2011

Greek Prime Minister George Papandreou said on Wednesday he would push ahead with a referendum on an EU bailout deal, defying demands from lawmakers of his own party that he quit for jeopardising Greek membership of the euro.

'The referendum will be a clear mandate and a clear message in and outside Greece on our European course and participation in the euro,' Papandreou told a late-night cabinet meeting, according to a statement released by his office.

'No one will be able to doubt Greece's course within the euro,' he said, adding that market turmoil triggered by his announcement of the referendum late on Monday would be short-lived.

The euro and global stocks were pummelled on financial markets on Tuesday after Papandreou's move threw into question the survival of crucial efforts to contain the euro zone's sovereign debt crisis.

The leaders of France and Germany, caught unawares by Papandreou's high-stakes gamble, summoned him to crisis talks in Cannes on Wednesday to push, before a summit of the G20 major world economies, for quick implementation of the bailout deal.

But Papandreou said Greece's partners would support its policies and urged the G20 meeting to agree policies that 'make sure democracy is above market appetites'.

German Finance Minister Wolfgang Schaeuble told Wednesday's Financial Times Deutschland newspaper he was confident the Greeks would support the government's reforms in the referendum. 'If Greece accepts the burden and efforts required by the aid programmes, if it wants to stay within the euro zone, then we will support it,' Schaeuble said.

Papandreou most immediate hurdle is a confidence vote on Friday. He told the cabinet he believed he would both win the vote and hold the referendum as planned.

'We believe the government will once again win a vote of confidence in order to proceed with its plans,' government spokesman Angelos Tolkas told reporters. 'We will not back down on anything we have to do to save the country.'     

Six senior members of Greece's ruling PASOK socialists, angered by Papandreou's decision to call a plebiscite on the 130 billion euro rescue package agreed only last week, said he should make way for a 'politically legitimate' administration.

During a cabinet meeting that lasted over 5 hours, some ministers backed Papandreou's decision, others questioned the timing of the referendum and criticised the fact they had been kept in the dark, and a handful were openly against it, government sources said.

'I think this was the wrong decision and we must take it back,' one minister was quoted as saying. 'We must not risk our position in the euro.'      

A leading PASOK lawmaker quit the party, narrowing Papandreou's slim majority to 152 of 300 seats, and several others called for a government of national unity followed by a snap election, which the opposition also demanded.     

Papandreou needs 151 votes to enact the referendum. If any of the dissenters votes against, it cannot be held.  - Reuters




Tags: euro | debt | referendum | Greek |

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