Papandreou under fire from all sides

THE Greek government faced possible collapse yesterday as ruling party lawmakers demanded Prime Minister George Papandreou resign for throwing the nation’s euro membership into jeopardy with a shock call for a referendum.

Caught unawares by his high-stakes gamble, the leaders of France and Germany last night summoned Papandreou to crisis talks with IMF managing directior Christine Lagarde in Cannes today to push for a quick implementation of Greece’s bailout deal ahead of a summit of the G20 major world economies.

A joint statement by German Chancellor Angela Merkel and French President Nicolas Sarkozy said they were “determined to ensure the implementation without delay of the decisions adopted at the eurozone summit”, which they said were “more necessary than ever today”.

Greece will proceed with a referendum on the European Union’s financing package and Prime Minister, George Papandreou, will win a vote of confidence in Parliament this week, government spokesman Angelos Tolkas has said.

Tolkas said that Papandreou is currently discussing both votes with his cabinet in Athens. Greek Health Minister, Andreas Loverdos, and two other members of Papandreou’s cabinet planned to tell the premier to drop the plan for the referendum, Proto Thema newspaper reported earlier, without saying how it got the information.

“We’re not retreating and we haven’t retreated on all the things we needed to do to save the country,” Tolkas told state-run ERT3 TV yesterday. “As the prime minister said to his lawmakers yesterday, this is how we’re proceeding and these are our next steps.”

Papandreou’s grip on power has weakened amid a lawmaker rebellion after his decision to put the bailout plan to a referendum. One lawmaker, Milena Apostolaki, said she will defect from Papandreou’s socialist Pasok party, leaving him with 152 deputies in the 300-seat chamber.

Another four lawmakers have criticised the plans for the referendum, stopping short of defection, and six members of the party called on the premier to resign in a joint letter, Athens News Agency said yesterday. Other deputies have called for a national unity government.

Stocks fell, the euro tumbled and Italian bonds plunged yesterday on concern that the referendum, which blindsided Greek lawmakers as well as European policy makers, will push Greece into a disorderly default if the bailout is rejected.

Austerity steps imposed by creditors have sparked a wave of social unrest in the past 18 months, serving to undermine support for the government. Papandreou won his last major vote on austerity measures by 154 votes to 144 on Oct 20.