Greek cabinet backs debt deal referendum plans

 

Greece's prime minister held firm early today to his shock decision to call for a referendum on a hard-fought European debt deal, despite anger from abroad, market turmoil across the world and dissent from within his own party.

George Papandreou's government still faced a battle for survival, with a vote of confidence scheduled for Friday and a grilling from frustrated European leaders expected later in the day ahead of the Group of 20 summit in the French Riviera.

After a gruelling seven-hour Cabinet meeting that finished after 3am local time, government spokesman Ilias Mossialos said Mr Papandreou's ministers expressed "total support for the initiatives taken by the prime minister". He said the referendum would be held "as soon as possible".

However, government officials said two ministers still had strong reservations with the idea of a referendum, which will be the first in Greece since the country voted to abolish the monarchy in 1974.

The officials spoke on condition of anonymity to reveal details of the Cabinet meeting.

Mr Papandreou told his ministers that putting the issue to the Greek people was the only way to safeguard the European deal.

"We will not implement any programme by force, but only with the consent of the Greek people," he said. "This is our democratic tradition and we demand that it is also respected abroad."

A referendum, he said, "will be a clear mandate, and a clear message within and outside of Greece, about our European course and our participation in the euro", he said, according to a text of his speech to the meeting issued by his office.

"The dilemma is not 'this government or another one', the dilemma is 'yes or no to the agreement', 'yes or no to Europe', 'yes or no to the euro,"' he said.

World markets were hammered after Mr Papandreou's surprise Monday night announcement amid fears the vote could unravel a deal which took European leaders months of complex negotiations among themselves and with banks to reach.

Greece's general price index plunged to close down 6.92%, while in Germany the Dax index, the major stock market average, lost 5% - the equivalent of about 600 points on the Dow. The French stock market closed down 5.4%, the Italian 6.7% and London 2.2%. The Dow Jones industrial average finished down nearly 300 points, or 2.5%.

European leaders made no secret of their displeasure.

"This announcement surprised all of Europe," said a clearly annoyed French president Nicolas Sarkozy, who has been scrambling to save face for Europe before he hosts leaders of the G20 major world economies beginning tomorrow.

"Giving the people a say is always legitimate, but the solidarity of all countries of the eurozone cannot work unless each one consents to the necessary efforts," he said.

Mr Sarkozy and German chancellor Angela Merkel, who have been at the forefront of Europe's efforts to contain the debt crisis, talked by phone and agreed to convene emergency talks today in Cannes, France, to which Mr Papandreou was also summoned to discuss implementation of the bailout.

The working dinner will also be attended by Jean-Claude Juncker, who chairs eurozone ministerial meetings, International Monetary Fund chief Christine Lagarde, top EU officials Herman Van Rompuy and Jose Manuel Barroso, and new European Central Bank chief Mario Draghi.

Mr Papandreou's decision could upend the October 27 deal that was the product of months of work by European leaders who were trying, sometimes opposed by their own people, to agree on the details of a second bailout for Greece and shore up their own economies in the name of saving the euro.

The deal would require banks holding Greek government bonds to accept 50% losses and provide Greece with about 140 billion US dollars in rescue loans from European nations and the IMF.

Greece has been relying since May 2010 on a first multibillion dollar bailout by other eurozone countries and the International Monetary Fund.

Mr Juncker said the referendum was a dangerous decision that could endanger Greece's next instalment of bailout loans - without which the country will run out of money in mid-November.

Dutch prime minister Mark Rutte, meanwhile, said he would try to prevent the referendum plan, saying he would "attempt to see that it doesn't happen". But he conceded it was up to Greece how it approves or rejects the European deal.

Mr Papandreou's decision had left his government teetering on the verge of collapse as his own deputies rebelled and his Socialist party saw its parliamentary majority whittled down to just two seats in the 300-member legislature with the defection of Milena Apostolaki. Others called for the prime minister's resignation and the creation of a national unity government.

"Yesterday's surprise and irrational announcement of the referendum has led me to doubt something that I considered certain until yesterday: That I am a member of a group that is striving to save our country from bankruptcy," Socialist deputy Hara Kefalidou said.

"I cannot back a referendum which is a subterfuge by a government that appears unwilling to govern."

AP

Start your day with The Independent, sign up for daily news emails
Sport
England's women celebrate after their 3rd place play-off win against Germany
Women's World CupFara Williams converts penalty to secure victory and bronze medals
Arts and Entertainment
Ricardo by Edward Sutcliffe, 2014
artPortraits of LA cricketers from notorious suburb go on display
News
newsHillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Sales Administrator - Spanish Speaking

£17000 - £21000 per annum: Recruitment Genius: This is a fantastic opportunity...

Recruitment Genius: Sales Administrator - German Speaking

£17000 - £23000 per annum: Recruitment Genius: This is a fantastic opportunity...

Recruitment Genius: Sales Administrator - Japanese Speaking

£17000 - £23000 per annum: Recruitment Genius: If you are fluent in Japanese a...

Recruitment Genius: Graphic Designer - Immediate Start

£16000 - £25000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'