Greek Govt Greenlights Shocking Referendum Plan

World | November 2, 2011, Wednesday // 08:56| Views: | Comments: 0
Bulgaria: Greek Govt Greenlights Shocking Referendum Plan In a cabinet meeting lasting late into Tuesday night, Papandreou told ministers the government needed the consent of the Greek people. Photo by EPA/BGNES

Greece's cabinet has given unanimous backing to a controversial plan by PM George Papandreou to hold a referendum on a EU debt rescue package.

Following the seven-hour meeting, government spokesman Elias Mossialos said: "The cabinet expressed its support."

"The referendum will take place as soon as possible, right after the basics of the bailout deal are formulated," he added.

"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 told told an emergency cabinet meeting, as cited in an official statement, circulated to the media.

On Tuesday, French President Nicolas Sarkozy has slammed Greek Prime Minister George Papandreou for proposing a referendum on the plan agreed upon by European leaders last week, saying this is "the only way" to fix the country's debt.

The referendum proposal "surprised all of Europe," Sarkozy told reporters in Paris.

"The plan adopted unanimously by the 17 members of the euro area last Thursday is the only possible way to resolve the problem of Greek debt," he said.

Last week EU leaders agreed to remit 50% of the massive Greek debt in return of widescale austerity measures geared to tame in the financial crisis that has gripped the country and has threatened the eurozone.

This has provoked the latest upsurge in popular protests across Greece, with citizens taking on to the streets against what they see as punitive and unfair job and spending cuts.

Sarkozy will meet on Wednesday with German Chancellor Angela Merkel, officials from the International Monetary Fund and European institutions to discuss the Greek situation.

The gathering will take place at 5:30 p.m. in Cannes, France, before a meeting Chinese President Hu Jintao and then Papandreou later in the evening. Group of 20 leaders gather in Cannes the following day.

European stock exchanges were shocked by the announcement of Greek PM George Papandreou that the country will hold a referendum on its latest bailout deal.

Before mid-day Tuesday, the Frankfurt DAX index had fallen with 4.01%, French CAC - with 3.37, London FTSE - with 2.4%, while the ATHEX index for the Athens exchange sunk with 5.96%.

Analysts have commented that news of the referendum had sent "shockwaves" across stock exchanges, raising fresh notes of pessimism regarding the debt crisis in Europe.

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Tags: Nicolas Sarkozy, French President, Frankfurt, Referendum, Andonis Samaras, protests, austerity, bailout, financial crisis, debt, index, stock exchange, EU, George Papandreou, greece, Eurozone, financial crisis, German Chancellor, Angela Merkel, International Monetary Fund, Greek, European
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