–Move Could Presage Early Elections If Bailout Deal Is Rejected

Athens (MNI) – Greece’s Prime Minister George Papandreou said on
Monday that he will hold a referendum on the new EU bailout deal,
hinting that early elections are possible if the referendum fails to win
voters’ approval.

Papandreou’s decision, which was unexpected, came after a new
plunge in the government’s approval rating and amid mounting civil
unrest. In the latest opinion poll, published Sunday, 60% of the Greek
people said they disapproved of the new bailout plan unveiled after the
Eurozone leaders’ summit last Thursday. Only 15% said they approved of
how the government was handling the crisis.

Speaking Monday evening to his party’s members of parliament,
Papandreou said the Greek people should be the ones to approve or reject
the new deal.

Immediately after his announcement, all the opposition party
leaders demanded early elections, accusing Papandreou of plotting his
personal exit and of failing to consider that the referendum, expected
to take place in January, would drag Greece into a prolonged
pre-election mode.

Last Thursday, EMU leaders agreed to a second bailout plan for
Greece, including a 50% write-down on the country’s privately held debt
and E130 billion in new public money. However, the details of the
private sector haircut have not yet been decided and are not expected to
be settled until at least the end of the year. Negotiations with
Greece’s private creditors, represented by the Institute of
International Finance, a global association of banks, started today.

It remains to be seen how the referendum will affect the
negotiations between the EU and the bankers.

Papandreou also said he would ask for a vote of confidence to
secure support for his policy for the remainder of his four-year term,
which expires in 2013.

Debate on the confidence motion will begin on Wednesday, with a
voice vote set for Friday. The main opposition party, New Democracy,
said it would not participate in the three-day vote of confidence
debate.

Papandreou’s ruling Socialist PASOK party has a fragile majority of
153 out of 300 parliamentary seats.

Several MPs have challenged the legality of the referendum, arguing
that the Greek constitution allows such measures only on matters of
great national importance. For instance, the last referendum took place
December 1974 when the Greeks voted to abolish the monarchy and
establish a republic, following the collapse of the junta.

–Athens Bureau, Angelika Papamiltadou; a_papamiltiadou@hotmail.com

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