Greece Scraps Referendum Plans

USA Today reports that Greek Prime Minister George Papandreou has given up on the referendum many feared would scuttle the European Union’s rescue plan for Greece:

Greek Prime Minister George Papandreou today abandoned his plan to put a European rescue deal to a referendum and opened emergency talks with his political opposition.

Speaking to his ministers, Papandreou said his proposal to hold a referendum “has at least brought many people toward a rational view” of Greece’s dire economic situation, the Associated Press reports. Several Greek lawmakers had called for a coalition unity government to approve the bailout package without a referendum, but Papandreou said stepping down would make things worse.

“Elections as a solution, today and at this moment, would mean a much greater danger of bankruptcy and of course exit from the euro,” Papandreou said.

The “election solution” he wants to avoid is not a reference to the referendum that came as a shock to everyone on Earth who is not George Papandreou, but the snap elections his political opponents have been agitating for.  The UK Guardian describes Papandreou’s government as hovering on the “brink of collapse” this morning:

The Greek government stands on the point of collapse, with the country set for a general election over membership of the euro rather than the referendum planned for early December.

Calls for a national unity government embracing the opposition also intensified as EU political leaders and financial markets demanded an end to the regional uncertainty unleashed by a small country on the periphery of the eurozone and called for measures to prevent a slide into Europe-wide slump.

George Papandreou called an emergency meeting of his cabinet for noon local time (10am GMT) on Thursday after his finance minister broke ranks over the referendum and several socialist deputies quit or threatened to quit his Pasok bloc in parliament.

The threat of blowing up the EU bailout deal with a public vote was actually shot down by Evangelos Venizelos, Papandreou’s finance minister, who had been hospitalized with abdominal pains… and that was before his boss dropped the referendum bomb on him.  He’s feeling much better now, as the Guardian reports:

Venizelos is laying down the law to Pasok. He’s the deputy leader, but he sounds more like the main man right now.

His first point is that Greece must do everything it can to reassure its partners that it will fulfil its obligations. His second point – “Greece must say that it is not holding the referendum”. This is important, as Papandreou spent part of his speech justifying the referendum idea.

Venizelos continues to warn the assembled deputies that Greece needs the next slice of aid, worth €8bn, before December 15.

He also says that the legislation bringing the new bailout deal into law ought to be passed by at least 180 of Greece’s 300 MPs. For that, Papandreou really would need New Democracy’s support, as his support dwindled to 151 today.

The Prime Minister hasn’t resigned, but he’s facing a confidence vote tomorrow, and he appears to have united the normally fractious opposition parties into a remarkably chummy coalition, united by their mutual dread of whatever George Papandreou is going to do next.