3 Nov 2011

Greek referendum cancelled amid political chaos

Greece’s Prime Minister Papandreou says he will not go ahead with plans for a referendum on the EU bailout, but calls for unity from opposition parties.

Prime Minister George Papandreou’s announcement on Greek television came at the end of a day of conflicting information and widespread confusion in Athens.

He confirmed that he would scrap the referendum plan if the conservative opposition agreed to back the package in parliament, saying: “I will be glad even if we don’t go to a referendum, which was never a purpose in itself.

“I’m glad that all this discussion has at least brought a lot of people back to their senses. If the opposition comes to the table, a referendum is not needed.”

He also emphasised the difficult position that a referendum would put Greece in, after the European Commission pointed out that no country can legally exit the euro without also leaving the European Union.

If the opposition comes to the table, a referendum is not needed. Greek Prime Minister George Papandreou

“Our position in the euro is what is at stake. The only way of remaining in the euro is to adhere to the terms of last week’s bailout deal.”

Rumours of Mr Papandreou’s imminent resignation have circulated all day. But he stayed on, delivering an address to the Greek parliament, during which two of his own cabinet ministers walked out.

Read more:An extraordinary day of greek political chaos

Both the conservative opposition and some lawmakers within the governing socialist party demanded a unity government which would push the 130bn euro rescue package through parliament.

Mr Papandreou came under intense pressure at home and from France and Germany to pull back on referendum plans.

Conservative leader Antonis Samaras led calls for a new government. In a statement he said: “I’m asking for the formation of a temporary transitional government with an exclusive mandate to immediately hold elections. And the ratification of the bailout deal from the current parliament.”

Greek government split

Rumours of a move to a coalition government of national unity began to take hold this morning, after the Greek Finance Minister Evengelos Venizelos made clear his split from the prime minister on the issue of whether there should be a referendum on the planned euro bailout.

In a statement Mr Venizelos said: “Greece’s position within the euro area is a historic conquest of the country that cannot be put in doubt.

“What is important is for the sixth tranche [of bailout money] to be disbursed, without any distractions or delay, according to the decisions of Eurogroup of 26 October.”

Read more: Papandreou faces axe after bluff called by Merkozy

Senior politicians from France, Italy and Spain, the German finance minister and the heads of the International Monetary Fund, European Central Bank and other top EU officials are meeting to look at ways of accelerating implementation of an anti-crisis package agreed on 27 October.

UK ready to increase funds for IMF

David Cameron flew in to Cannes on Thursday morning. The UK has previously refused to contribute to a Greek bailout, and Mr Cameron said the UK will put more money into the IMF but only if the extra resources are targeted at countries with reform programmes.

He maintained that UK would not contribute to the debt bailout: “I’m here to safeguard the British economy. We’ve taken difficult decisions at home that have protected us from the worst of the debt crisis.

“There is a bigger opportunity here, because if the world can come together and solve some of its problems, the worst of which is the eurozone crisis, then actually that would be a big boost to the British economy.”

The UK City Minister Mark Hoban has been taking questions on the eurozone crisis in the House of Commons. He told the house that the UK has been “ahead of the curve” in terms of introducing austerity measures and keeping borrowing costs low.

He said it was “vital” that world leaders “commit to increased confidence in the global economy and agree a detailed euro-area rescue” and told MPs that the UK is prepared for “any eventuality”.


That plan, which includes debt relief for Greece, a recapitalisation of European banks and a leveraging of the bloc’s rescue fund, the European Financial Stability Facility (EFSF), was meant to stem the two-year-old crisis before Greek PM George Papandreou’s referendum call sent the bloc into damage control mode.

US urges resolution

The United States has stepped into the debate as President Obama arrived in Cannes he urged European leaders to resolve the debt crisis. Speaking in France he said: “The most important task over the next few days is to resolve the financial crisis here in Europe.”