Greek ruling-party MP: Papandreou is 'history'

An MP from Greek's ruling Socialist party has said prime minister George Papandreou is "history".

Dimitris Lintzeris added that Mr Papandreou must convene an emergency meeting of ministers.

Mr Papandreou has called an emergency cabinet meeting for today as the governing Socialists revolted against a planned referendum over the EU bailout deal.

Finance minister Evangelos Venizelos broke ranks with the prime minister on the referendum proposal.

Mr Venizelos said Greece’s position within the euro was a “historic conquest” of the country that “cannot be put in doubt” and “cannot depend on a referendum”.

Earlier today, Socialist politician Eva Kaili also said she would not support the government in Friday’s confidence vote.

The drama came after European leaders drew a line in the sand for Greece, saying its referendum on a hard-won bailout deal will decide whether it stays in the eurozone – and vowing Athens will not get new aid until the result is in.

The acknowledgement that the proposed vote – which will likely take place on December 4 – could see Greece leaving the currency union is the first official admission that such an exit is possible and follows almost two years of pledges to the contrary.

The move to tie the vote to the fate of the euro is a huge gamble that could endanger the future of the currency union, the centrepiece of Europe’s postwar unity, and potentially push the world economy into another recession.

“The referendum ... in essence is about nothing else but the question, does Greece want to stay in the eurozone, yes or no?” German chancellor Angela Merkel said at a news conference together with French president Nicolas Sarkozy.

The leaders of the two biggest eurozone economies spoke to the press after emergency talks with Mr Papandreou in Cannes, France.

The discussion also included International Monetary Fund head Christine Lagarde and other top EU and eurozone officials.

By turning the referendum into a popular vote on whether Greece wants to remain in the eurozone – the currency union that gave it access to the club of Europe’s richest countries but also allowed it to pile up a massive debt mountain - leaders are taking a risky bet.

The exit of the eurozone’s weakest member could trigger a dangerous domino effect that could quickly see Ireland and Portugal, the other two countries that have received bailouts, also leave the currency bloc and cause the financial collapse of Italy and Spain, which are barely hanging on.