Greece to hold referendum on EU aid package

The Greek government has said that it will hold a referendum on a new EU aid package, calling on voters to say whether they want to adopt it or not.

“We trust citizens, we believe in their judgement, we believe in their decision,” George Papandreou, the prime minister, told ruling Socialist politicians on Monday.

“This is a supreme act of democracy and of patriotism for the people to make their own decision,” he continued. “We have a duty to promote the role and the responsibility of the citizen.”

The announcement has taken other European leaders by surprise, ahead of the G20 summit in Cannes, France, later this week.

In Germany, a member of Angela Merkel’s centre-right coalition said the news of the referendum gave the impression that Greece was trying to backtrack on its deal with EU leaders.

“I was irritated (by the news),” Rainer Bruederle, the parliamentary floor leader for the Free Democrats Party (FDP), told Deutschlandfunk radio. “This sounds to me like someone is trying to wriggle out of what was agreed — a strange thing to do.”

“Mr. Papandreou is dangerous, he tosses Greece’s EU membership like a coin in the air.” – Yannis Michelakis, New Democracy party spokesman

“The prime minister had (agreed) to a rescue package that benefited his country. Other countries are making considerable sacrifices for decades of mismanagement and poor leadership in Greece — wrong decisions were made and the country manoeuvred itself into this crisis.”

Joerg Rocholl, president of the European School of Management and Technology in Berlin, told ZDF television that Greece’s retreat from the agreement could mean that other countries no longer feel obliged to take part in the rescue.

“That could mean that Greece can’t remain in the euro,” Rocholl said.

“The situation is so tight that basically it would be a vote over their euro membership,” Alexander Stubb, the Finnish minister of European affairs and foreign trade, said in an interview with Finnish broadcaster MTV3.

“Greece has committed to a new programme which includes structural reforms. All of a sudden, if they vote against those reforms, then Greece is the one who violated the agreement,” he said.

Markets respond

Asian stock markets on Tuesday fell on concerns over the eurozone rescue plan, with Japan’s Nikkei 225 index dropping 1.2 per cent. Hong Kong’s Hang Seng down 1.4 per cent and Australia’s S&P/ASX 200 down 1.3 per cent.

European stock index futures pointed to a sharply lower open on Tuesday, adding to the previous session’s losses.

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The EU deal  calls on private holders of Greek bonds to write off 50 per cent of the country’s debt and provides the troubled eurozone member with 40bn euros in additional rescue loans.

Papandreou appeared to take many politicians by surprise with the announcement, and drew criticism from political opponents.

“Mr. Papandreou is dangerous, he tosses Greece’s EU membership like a coin in the air,” said main conservative opposition New Democracy party spokesman Yannis Michelakis.

“He cannot govern and instead of withdrawing honourably, he dynamites everything,” he added.

He gave no date or other details of the proposed referendum but said that he would seek a vote of confidence in parliament.

Papandreou’s government has seen its parliamentary majority reduced to just three seats and its approval ratings plummet amid harsh austerity measures that have fuelled national protests and are likely to send the country into a fourth year of recession in 2012.

‘Make-or-break moment’

John Psaropoulos, a journalist in Athens, told Al Jazeera that Papandreou’s government was seeking new ways to legitimise itself following months in which it had faced public scorn over austerity measures implemented to access international bailout payments.

“I think Papandreou has decided that this is his make-or-break moment and he doesn’t want to stay in power any longer if he’s going to be questioned,” said Psaropoulos.

Nearly 60 per cent of Greeks view Thursday’s EU summit agreement on a new euro bailout package as negative, or probably negative, a survey showed on Saturday.

Makis Voridis, a member of parliament for the far right LAOS party, said: “The prime minister is obviously stuck in a dead end and he is leading the country down a very dangerous slope.”

Some parliamentarians even questioned the referendum’s legality under the constitution, which does not allow referendums on economic issues but only matters of great national importance.

The last time Greeks held a referendum was in December 1974, when they voted to abolish the monarchy shortly after the collapse of a military dictatorship.

“It’s debatable whether the constitution allows such a referendum,” said Fotis Kouvelis, leader of the Democratic Left party. “The country must go to early elections. Given the situation, it’s the most honourable solution.”

“If the referendum answer is no, Papandreou has to resign,” said Costas Panagopoulos, an analyst at polling firm Alco.

“In the meantime what will happen with the decisions the EU took last week? I cannot understand what the prime minister wants to do. It could be the only way he has to leave the government, to share responsibility.”