Leaders of France and Germany seek to limit damage to wider eurozone as uncertainty looms over continent’s debt crisis.
Greece’s prime minister is set to meet French and German leaders on the sidelines of the G20 summit amid fresh concerns that plans for a Greek referendum on a European Union debt bailout plan could throw the eurozone back into crisis.
Greece’s cabinet said early on Wednesday that it backed George Papandreou’s unexpected proposal for a referendum, which was greeted with surprise both in Greece and abroad.
“The cabinet expressed its support,” said government spokesman Elias Mossialos early on Wednesday. “The referendum will take place as soon as possible, right after the basics of the bailout deal are formulated.”
Some ministers leaving the seven-hour cabinet meeting said they had expressed criticism of the decision but decided to support the government ahead of a delicately poised confidence vote in parliament on Friday.
The referendum would happen by December if Greece and its international partners work out details of the bailout agreement in time, Haris Kastanidis, Greece’s interior minister, said.
Kastanidis had said earlier that the vote would most likely be held in January.
Papandreou told his cabinet that Greece’s plan to hold a referendum on the EU aid package would make clear that the country belonged in the eurozone, the 17-country bloc that uses the euro single currency, and that market turmoil triggered by the announcement would be short-lived.
“The referendum will be a clear mandate and a clear message in and outside Greece on our European course and participation in the euro,” Papandreou said, according to a statement released by his office. “No one will be able to doubt Greece’s course within the euro.”
‘Plan for national revival’
Papandreou said Greece’s partners would support its policies and urged G20 leaders, gathering in the French resort of Cannes, to agree policies that “make sure democracy is above market appetites”.
But Papandreou came in for criticism from within his ruling Socialist party (PASOK) with six senior members calling for his resignation.
Al Jazeera’s Jonah Hull reports from Athens on the latest political crisis gripping Greece
“The country urgently needs a politically legitimate government, a plan for a national revival,” the semi-official news agency ANA quoted a joint letter by the parliament members from PASOK’s national council as saying.
Milena Apostolaki, a parliament member, broke away from PASOK to declare herself an independent, leaving the party with a majority of just two seats in the 300-member legislature.
French President Nicolas Sarkozy, who is hosting the G20, held emergency talks with German Chancellor Angela Merkel over the phone to discuss the situation.
Both the leaders said in a statement that they were determined, together with their European partners, to guarantee the complete and timely implementation of the euro debt deal.
Al Jazeera’s Jonah Hull, reporting from Athens, said Papandreou’s gamble appeared not to be working his way.
“This announcement by the Greek prime minister seems to have come as a surprise even to his cabinet and there are reports he didn’t even confer with his ministers over this,” he said.
“He certainly did not give away any hints or clues about it at the marathon talks last week in Brussels with his fellow eurozone leaders.”
‘He needs every single vote’
Referring to a no-confidence vote that Papandreou faces on Friday, our correspondent said: “He needs 150 plus one vote and that’s the number of votes he has. He needs every single vote.
“There are rumours that there are others among his Socialist party who are considering their position. So, it is looking possible at least that Papandreou may not survive Friday’s no-confidence vote.
“That would mean the government has fallen. There would then be a possibility that the Socialists might be asked to form some sort of coalition. If they can’t, the opposition, the conservative New Democracy Party, might have a go. If that fails then there would be general elections.”
Papandreou also faces a tough challenge persuading Greek voters to back the bailout plan. With anger running high in Greece over tough austerity measures that have raised taxes, lowered wages and triggered strikes, analysts fear Greeks will vote down their financial lifeline and push the country to economic collapse.
A poll over the weekend showed nearly 60 per cent of Greeks have a negative view of the rescue deal, suggesting that voters in the referendum likely to be held early next year, will say no to the rescue package.
Last week’s bailout package had raised hopes a line could be drawn under the euro debt crisis, with private investors accepting a 50 per cent write off on Greek debt and the country’s economy bolstered by bailout funds, while eurozone bonds would be sold to China and other investors.