Referendum is a serious issue for all the eurozone

PRIME Minister George Papandreou’s call for a referendum on the latest Greek bailout plan has blown a potentially fatal hole in the eurozone’s strategy to overcome its sovereign debt crisis.

Whether or not a referendum takes place, and whatever the result, Papandreou’s gamble guarantees long weeks of political uncertainty just when the 17-nation currency area was desperate for a period of calm to implement remedies agreed last week.

It will make it harder, if not impossible, to restore investors’ confidence in most eurozone government debt in the short term and to lure Chinese and other wealth funds to pour billions into European sovereign bonds.