Move announced by bank’s new head as he warns that eurozone may slip into “mild recession” in latter part of 2011.
|George Papandreou’s future as PM is still uncertain as he is to face a vote of confidence on Friday [EPA]|
The Greek prime minister has announced he will scrap the idea of a referendum on a vital bailout package and hold talks with the opposition to resolve the country’s political and economic crisis.
In a speech to his cabinet on Thursday, George Papandreou said he would assign the task of discussions with the opposition to two senior party members and praised their support of the $180m bailout deal.
If the opposition agreed to back the deal in parliament no referendum would have to be held, he said.
“I will be glad even if we don’t go to a referendum, which was never a purpose in itself. I’m glad that all this discussionhas at least brought a lot of people back to their senses,” he said in the text of his speech released to media.
“I will talk to [opposition leader Antonis] Samaras so that we examine the next steps on the basis of a wider consensus.”
He reiterated that Greece’s eurozone membership was not in question and that heading to elections immediately would entail a big risk of the country going bankrupt.
Al Jazeera’s Jonah Hull, reporting from Athens, said: “Talks will begin with the opposition and if a concensus is reached then there is no need for a referendum.
“Addressing the parliament, Papendreaou thanked the opposition for their change of heart towards the bailout, which is astonishing as people in Greece would say that Papandreou is mad as it was he who suggested the idea of a referendum in the first place.”
The opposition New Democracy Party had earlier in the day called for a transitional government to lead the country until it secures a vital aid payment from foreign lenders, with a view to new elections after the funds are received.
Papandreou was told by European leaders on the sidelines of the G20 summit in France that his country had to choose whether it wants to stay in the eurozone or miss the bailout.
He faces a confidence vote on Friday. A series of defections cast doubts on whether he will keep his job.
In the run-up to the emergency cabinet meeting, Papandreou told the Greek state TV he was not resigning.
The Reuters news agency quoted a source in his office as saying “there is no resignation by the prime minister … There is no resignation by the cabinet”.
Papandreou caused fears and panic on financial markets by announcing on Monday that Greece would hold a referendum, tentantively on December 4, on a second bailout plan negotiated with eurozone leaders last week.
“It’s not the moment to give you the exact wording, but the essence is that this is not a question only of a programme, this is a question of whether we want to remain in the eurozone,” Papandreou said.
Opinion polls suggest a majority of Greeks, worried about austerity measures, think the bailout package is a bad deal for Greece, but Papandreou said he expected more support from the population than he could garner in parliament.
“I believe the Greek people are wise and capable of making the right decision for the benefit of our country,” he said.
German and French leaders told Papandreou at a news conference in Cannes on Wednesday that saving the euro was ultimately more important to them than rescuing Greece.
Angela Merkel, the German chancellor, said the stabilisation of the euro could be better achieved “with Greece than without Greece”, but added that stabilising the currency was more important.
“Our Greek friends must decide whether they want to continue the journey with us,” Nicolas Sarkozy, who said last week that it was a “mistake” to allow Greece into the eurozone, told the news conference in Cannes.
Sarkozy and Merkel said eurozone finance ministers would meet next Monday to expedite decisions on leveraging the eurozone’s rescue fund to build a firewall to protect other weaker members of the currency area.
Jean Leonetti, France’s European affairs minister, said there was no question of the eurozone renegotiating Greece’s bailout package.
Papandreou told reporters in Cannes his referendum would in effect be a vote on whether Greece should remain in the euro.
But the European Commission said if Greece left the European single currency, it would have to leave the European Union as well.