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Greek PM calls referendum on new EU aid deal

01 November 2011 07:58 (UTC +04:00)

Baku - APA-Economics. Greek Prime Minister George Papandreou called an unexpected referendum on Monday on the EU bailout deal for his debt-ridden country, a move that could necessitate a snap election if a public angry with swinging austerity measures rejects the deal, APA reports quoting Reuters.

Pressured by his own lawmakers to share the heavy political burden of belt-tightening with other parties, Papandreou said he needed wider political support for the fiscal measures and structural reforms required by international lenders.

"We trust citizens, we believe in their judgment, we believe in their decision," he told ruling Socialist party deputies. "In a few weeks the (EU) agreement will be a new loan contract... we must spell out if we are accepting it or if we are rejecting it."

Analysts said holding a referendum was a baffling decision, given that the latest survey showed a majority of Greeks taking a negative view of the bailout deal.

Opposition parties reacted angrily, accusing Papandreou of looking for a way out for his embattled party by dragging Greece, which has seen violent clashes between protesters and riot police, through a lengthy period of political instability.

The euro extended losses against the dollar after the announcement, tumbling more than 2 percent to a session low.

Papandreou, grappling with Greece’s worst financial crisis in 40 years, had discussed holding a referendum but many people were shocked at the prospect of weary, disgruntled citizens being asked to decide whether to accept or reject the bailout.

"Mr. Papandreou is dangerous, he tosses Greece’s EU membership like a coin in the air," said conservative opposition New Democracy party spokesman Yannis Michelakis. "He cannot govern and instead of withdrawing honorably, he dynamites everything."

New Democracy leader Antonis Samaras will visit President Karolos Papoulias on Tuesday to discuss developments and push for snap elections, party officials said.

Weekend polls showed most Greeks took a negative view of the decision by euro zone leaders last week to hand cashed-strapped Athens a second, 130-billion-euro bailout and a 50-percent write-down on its enormous debt to make it sustainable.

"I never expected Papandreou to take such a dangerous and frivolous decision," said Dora Bakoyanni, former foreign minister and leader of the small center-right Democratic Alliance party. "Tomorrow all the international media will say that Greece itself is putting the EU deal at risk."