Demands mounted yesterday for Greek Prime Minister George Papandreou to resign and let a coalition government approve a European bailout plan instead of holding a risky referendum on it.
Papandreou’s proposal earlier this week to put the hard-fought bailout package to a referendum horrified Greece’s international partners and creditors, triggering turmoil in financial markets as investors fretted over the prospect of a disorderly default and the country’s exit from the eurozone.
The instability in Greece sent immediate ripples throughout Europe. Italian Prime Minister Silvio Berlusconi’s government was teetering as well after it failed to come up with a credible plan to deal with its dangerously high debts, while Portugal demanded more flexible terms for its own bailout.
The European Central Bank made a surprise decision yesterday to cut interest rates by a quarter of a percentage point to 1.25 percent, responding to the financial turmoil.
The drama also dominated the G20 meeting in the French resort of Cannes, where the leaders of the world’s economic powerhouses had gathered to solve Europe’s debt crisis, which threatens to push the world back into recession.
Papandreou was holding an emergency meeting yesterday with his ministers. Several of them called for a coalition national unity government that would approve the bailout package without a referendum and make sure the country receives vital funds to prevent imminent bankruptcy.
Rumors abounded about a possible Papandreou resignation, but two officials in his office denied reports that he would visit the country’s president and tender his resignation in the afternoon. The president’s office also said it had no knowledge of such a meeting.
Several of Papandreou’s close associates said they did not know what his intentions were, but he was delivering a speech to ministers.
“He wrote the speech himself. Nobody knows what’s in it,” said one close associate, who spoke on condition of anonymity.
Antonis Samaras, the leader of the main opposition party, called for a transitional government to ratify the European debt deal and prepare for early elections.
“Under the weight of these dramatic events, we have witnessed a crisis of the ability to govern. The country must immediately return to a state of normality,” Samaras said. “Under the current conditions, the new debt deal is unavoidable and must be safeguarded.”
State TV said lawmakers were sounding out former European Central Bank vice president Lucas Papademos as a possible unity government leader.
If the Greek government did fall, it would mean that every EU nation that had already received a bailout — Greece, Portugal and Ireland — had seen their governments fall during the economic turmoil.
Earlier yesterday, Papandreou’s own finance minister, Evangelos Venizelos, broke ranks with him and declared his opposition to a referendum.
“Greece’s position within the eurozone is a historic conquest of the country that cannot be put in doubt,” Venizelos said, adding that it “cannot depend on a referendum.”
Venizelos said the country’s attention should be focused on quickly getting a crucial 8 billion euros (US$11 billion) installment of bailout funds, without which it faces bankruptcy within weeks.
“What matters now, is that we must save what we can, to remain united,” Greek Health Minister Andreas Loverdos said.