Greek Finance Minister Evangelos Venizelos has opened a rift in the country's government by publicly rejecting the notion of a referendum on euro membership.
George Papandreou, Greece's prime minister, met with his French and German counterparts on Wednesday night to discuss his highly controversial decision to put the eurozone's hard-fought agreement to bail out the stricken economy to the public vote.
With the entire eurozone rescue plan thrown into doubt by Papandreou's gamble - which he believes will add popular legitimacy to a package passed down from Europe - his fellow leaders issued an ultimatum: that the referendum must take place in December, and it must be an unambiguous choice between remaining in the euro or leaving it.
Speaking at a press conference last night, German Chancellor Angela Merkel said: “We would rather achieve a stabilisation of the euro with Greece than without Greece, but this goal of stabilising the euro is more important.”
Nicolas Sarkozy, the French President warned: “Our Greek friends must decide whether they want to continue the journey with us.”
Polls show that most Greeks oppose the bailout package, but wish to remain within the single currency.
With Germany and France also saying that the Greeks would receive no new bailout money until after the referendum, there are serious questions about the government's ability to service its existing debt and pay its employees. The country has said previously that its budget would be exhausted by mid-November.
Venizelos, who was taken to hospital with stomach pains on Tuesday, issued a statement on Thursday morning saying that the country's euro membership was not negotiable.
"Greece's position within the euro area is a historic conquest of the country that cannot be put in doubt," he said. "This acquis by the Greek people cannot depend on a referendum."
"I have a duty to tell the Greek people the full and simple truth: If we want to protect the country we must, under conditions of national unity and political seriousness and consensus, implement without any delay the decision of October 26. Now, as soon as possible."
Papandreou has called another emergency cabinet meeting on Thursday, ahead of a confidence vote tomorrow. His Pasok party has just a slim majority in parliament, following a number of defections across the past six months of crisis.
Venizelos, an old political rival of Papandreou who fought him for the leadership of the party four years ago, was ironically brought into the government in June to be a uniting force. As a political veteran and heavyweight, Venizelos was expected to quell rivalries inside Pasok and help push through tough austerity measures.
03/11/2011 20:38 GMT
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03/11/2011 19:58 GMT
Reuters: Papandreou Will Step Down If Coalition Formed
Reuters is reporting that the Greek PM 'will stand down' if a coalition government is formed.
They quote an unnamed government source to support the story.
There is no other confirmation of that line as of yet.
03/11/2011 18:37 GMT
New Democracy Withdraws From Confidence Debate
"Samaras requests once again that Papandreou resigns, and that elections be held. He complains that Papandreou defames him in meetings with foreign leaders. He continues with a comparison to George Papandreou (the grandfather of the current premier), and the prevention of a vote in 1965. He contrasts this with 2011, where there are no elections because George Papandreou (the current premier) refuses them. “History repeats itself … as a farce.”
Harsh, brutal and perhaps unnecessary words. Given the vitriol, it’s very hard to see how these two politicians will agree on a government of national unity.
New Democracy is now withdrawing from the debate on the vote of confidence in the government.
Negotiations no doubt continue. But the terms are clear—the gauntlet has been thrown. George Papandreou will have to resign if he really wants a government of national unity."
03/11/2011 17:58 GMT
Reports: Greek PM Asked To Resign
Reuters is reporting that Antonis Samaras, the leader of the Greek opposition, has asked the PM to resign.
03/11/2011 17:57 GMT
George Osborne: Sense Of Urgency
There is no doubt that there is a real sense of urgency in the room and a real sense of urgency from every individual that I have heard.
There was also an emphasis on the need for specific actions to come out of our discussion ... The eurozone has taken significant decisions.
The question that people have is are they willing to implement those decisions.
03/11/2011 17:00 GMT
Venizelos: Greece Must Say It Is Not Holding A Referendum
Evangelos Venizelos, the deputy leader of Papandreau's Pasok party, says that Greece "must say it is not holding the referendum" - as compared to his leader who just spent part of his speech defending the idea.
He also said that the bailout must be passed by at least 180 of the country's 300 MPs. That means Papandreau needs the support of the opposition to pass the plan.
03/11/2011 16:29 GMT
Papandreou: We Will Work With Opposition
Papandreou is still addressing his MPs:
"If the opposition is willing to negotiate then we are ready to ratify this deal and implement it."
He says that this deal represents "new political position for all of us". The opposition will form part of the negotiating party, but it is not clear whether he means it will be a full coalition.
He appeals to his party to vote in tomorrow's confidence vote.
Papandreou claims the confusion/discussion (delete as appropriate) around the referendum has been a "beneficial shock".
03/11/2011 16:20 GMT
Papandreou: I Believe In Democracy
Papandreou: "I trust the wisdom and maturity of the Greek people and I trust it more than what is now called the political establishment.
"I believe deeply in democracy, and this is my principle and is well-rooted in our political party. In our political and cultural traditions. ... We believe in their opinion in one of the most important issues in recent days and of course our European partners recognise our right to go to a referendum ... Our partners would ideally not like to deal with national elections or a referendum."
Papandreou said that being part of the euro is 'taken for granted' in Greece.
Papandreou seems to be arguing that since turning down the bailout would be equivalent to leaving the Euro for at least ten years - he says was told this by the eurozone leaders - a referendum does not make sense.
"The question was not to have a referendum or not, it was how we safeguard the best possible implementation of the decisions that were made on 26 and 27 October."
"It was the failure of our society to implement this decision. ... It is revealing what has been talked about inside and outside Greece in the past couple of days. ... Our government is not afraid of asking the Greek people."
"But what alternatives did we have? The first one, which I think would be a catastrophe would be to go to a national election. ... I doubt we would get to the end of this election without a bankruptcy. The other alternative was to carry on with what we had started and get a consensus and prove to Europe that we could implement these decisions, and the third alternative would be to achieve a consensus for the decisions of the 26 and 27 October both before and after the elections, is something I have tried to achieve."
03/11/2011 16:05 GMT
Papandreou Addresses Greek Parliament
Papandreou has just told the Greek parliament that the October bailout deal was a 'landmark' for the country.
He said the deal had opened 'a new window to the future' and said the debt reduction would affect all of the people in Greece.
He has also talked about the prospect of a national unity government and said that the decision to hold a referendum or not was "our decision... a decision for the government".
"For the last two years we have waged a battle of Titanic proportions," he said.
"Our first duty being to fend off bankruptcy, to prevent the country collapsing."
The PM also said that the decisions made by the government have "saved the country" and added that its position inside the Euro was at stake.
"It's never happened before that a country has had 50% of its debt written off and is still complaining", the PM said.