Greek government teeters on brink of collapse in wake of referendum plan
France and Germany battle to save the single currency as Europe is plunged back into turmoil days after rescue deal
Phillip Inman, and Helena Smith in Athens
Tuesday 1 November 2011
The French president Nicolas Sarkozy and German chancellor Angela Merkel will hold emergency talks on Wednesday in a desperate attempt to hold the eurozone together and formulate a response to the Greek prime minister’s plan for a referendum on the austerity measures imposed by his European partners.
George Papandreou’s socialist government is on the brink of collapse after his referendum plan sparked an angry reaction within his own party and plunged Europe back into turmoil, just days after a complex rescue deal had been agreed – requiring Greece to embark on tough cost-cutting measures.
While Papandreou’s cabinet approved unanimously his decision to hold a referendum, it threatens to split the prime minister’s Pasok party. One MP, Milena Apostolaki, has quit in disgust at the idea of a referendum and several colleagues have said that if it is not abandoned they will join her. Papandreou faces a vote of confidence on Friday. A split in the Pasok party would almost certainly bring down the Greek government, which now has a majority of just two MPs in parliament.
The Greek finance minister, Evangelos Venizelos, who was rushed to hospital before the referendum announcement, said Papandreou had kept him in the dark over his plan to announce a vote.
As global markets tumbled, Papandreou assembled his cabinet, allowing his ministers to air their views on his surprise decision to call the vote. He told them the referendum remained the only way of overcoming public opposition to the spending cuts agreed as part of the eurozone rescue package. “Everything now rests on the vote of confidence.”