Greek premier convinces cabinet to endorse referendum

The Greek cabinet on Wednesday gave unanimous backing to a controversial plan by Prime Minister George Papandreou to hold a referendum on a EU debt rescue package. He told an emergency cabinet meeting that a referendum would offer “a clear mandate” for austerity measures demanded by other eurozone members. Some of his party lawmakers called for him to quit for jeopardizing Greek euro membership with his shock decision to call a popular vote, a move that pummeled the euro and global stocks, but the cabinet support at least gives him a stay of execution before a confidence vote in parliament Friday. “The referendum will be a clear mandate and a clear message in and outside Greece on our European course and participation in the euro,” Papandreou told the seven-hour cabinet meeting, according to a statement released by his office. Papandreou is due to meet European leaders in France today. In a cabinet meeting lasting late into Tuesday night, Papandreou told ministers the government needed the consent of the Greek people. Papandreou also said a possible alternative of snap elections would risk Greece defaulting on its debt. The Greek government faces a crucial confidence vote in parliament on Friday. Following the seven-hour meeting, government spokesman Elias Mossialos said: “The cabinet expressed its support.” “The referendum will take place as soon as possible, right after the basics of the bailout deal are formulated,” he added. Monday’s referendum announcement led to sharp falls on world markets on Tuesday. Asian markets also continued their slide on Wednesday. World markets dropped sharply in reaction to the referendum call. The planned referendum threatened to unravel a deal reached at a EU summit last week aimed at resolving the euro debt crisis. Leaders agreed on a 100bn-euro loan (?86bn; $140bn) to Athens and a 50% debt write-off. But in return, Greece must make deep cuts in public spending, slashing pensions and wages and making thousands of civil servants redundant. There have widespread protests in Greece against the measures. On Tuesday, French President Nicolas Sarkozy of France said Papandreou’s decision “surprised all of Europe”. The French and German governments said they wanted “full implementation” of the agreement “in the quickest time frame”. Mr Papandreou is to hold hastily arranged talks on Wednesday with Sarkozy and German Chancellor Angela Merkel, on the sidelines of a G20 summit in France.