Greek PM faces revolt ahead of vote

Greece’s ruling Socialists were in open revolt against their own prime minister ahead of a crucial confidence vote tonight.

A week of unending drama in Athens has horrified the indebted country’s European partners, spooked the markets and overshadowed the Group of 20 summit in Cannes.

The threat of a Greek default or exit from the euro worsened a European debt crisis that has already forced massive bailout deals for Greece, Ireland and Portugal.

Prime Minister George Papandreou was forced to abandon his plan to hold a referendum on the debt deal, after markets and EU leaders reacted with hostility, sparking a global crisis as investors feared that rejection of the deal would force a disorderly Greek default.

Mr Papandreou’s two-year-old government has a majority of two in the 300-seat assembly, but at least four Socialist dissenters have refused to say whether they will back him.

Government ministers and senior Socialist officials continued to pile pressure on him to hold immediate talks to form a national unity government – signalling that he may have to soon step aside even if he wins the vote.

A senior Socialist MP said he will not support the government in the midnight vote unless Mr Papandreou pledges to resign over the weekend and start talks on a caretaker government.

The MP asked not to be named.

The party revolt was triggered by Mr Papandreou’s surprising announcement on Monday that he would put a European debt deal to a referendum. He withdrew the proposal on Thursday in the face of fierce opposition.

“It is inconceivable that the government should win the confidence vote and then pretend that nothing had happened,” Health Minister Andreas Loverdos wrote on his internet blog.

“Unless immediate steps are taken toward the formation of a national unity government, I will have no place in that political process.”

Finance Minister Evangelos Venizelos spoke by phone to an array of European officials – German Finance Minister Wolfgang Schaeuble, Jean-Claude Juncker who chairs the eurozone’s 17 finance ministers, and EU’s Monetary Affairs Commissioner Olli Rehn – to officially tell them the referendum is off.

He also said the aim of the confidence vote was “to seek and achieve the broadest possible consensus and co-operation for the benefit of the country” - without giving further details.

The new debt deal would give Greece a €130bn rescue package – on top of the €110bn it was granted a year ago. It would also see banks write off 50% of the money Greece owes them, some €100bn.

The goal is to reduce Greece’s debts to the point where the country is able to handle its finances without relying on constant bailouts.

If the deal stalls, Greece will not get the next €8bn instalment of its loans and will probably go bankrupt before the year is out.

Mr Papandreou has given no indication that he plans to resign shortly, although he said he was not "glued to his seat".

But both his own Socialist party and the opposition conservatives are talking about elections – though they differ strongly on the timing.

A senior Socialist MP said if the government wins the late-night confidence vote, it can then launch talks with the opposition conservatives on forming a caretaker administration to lead the country through the next few crucial months, when Greece must approve the bailout and thrash out debt write-off details with banks.

Christos Protopappas said elections could then be held in February or March.

“We need three or four months ... to rationalise the situation, restore calm to the country, get rid of that 100 billion euro in debt and build international credibility,” said Mr Protopappas, the Socialists’ parliamentary spokesman.

“Then we can get back at each others’ throats for a month with elections – at that point everyone will be able to wait for us.”

The conservatives don’t want to wait. New Democracy party leader Antonis Samaras insisted that Mr Papandreou has to go now, and demanded elections within the next six weeks.

He argued that holding early elections now would drive Greece to bankruptcy.

“The electoral process takes about 40 days, and soon we be unable to pay salaries and pensions, while nobody will be able to negotiate with us on the bailout agreement,” he said.

Polls indicate the Greek public is close to the breaking point after more than 20 months of harsh austerity cuts and tax hikes, and waves of general strikes and protests have often degenerated into riots. Recent opinion surveys show 90 % of Greeks oppose Mr Papandreou’s policies and his party has just 20 % public support.

The Socialists came to power in a landslide 2009 victory, and immediately discovered that, under the ousted conservatives, Greece had falsified financial data for years.

A labour union plans to protest outside parliament later today.