31 October 2011

FT: Greece calls referendum on EU bailout

George Papandreou made the pledge in a speech to lawmakers in his fractious PanHellenic Socialist Movement party but did not set a specific date for the vote. “We have faith in our citizens, we believe in their judgement and therefore in their decision”, Mr Papandreou said after rejecting a call for early elections by some socialist politicians. “All the country’s political forces should support the bailout agreement. The citizens will do the same once they are fully informed.”

The premier’s move reinforced concerns that Greece’s fraught domestic politics are spiralling out of control amid growing popular anger over public sector job cutsand tax increases. Strikes and violent demonstrations have become frequent in Athens and other cities.

The referendum also looked likely to cause alarm in Brussels, Paris and Berlin after Mr Papandreou’s assurances at Wednesday’s summit that Greece was determined to maintain a steady pace of reform.

The premier also announced that a vote of confidence in his government would be held this week to endorse the referendum proposal. That vote would follow a three-day debate on Greece’s worsening economic and social problems. Antonis Samaras, the conservative opposition leader, immediately rejected the proposal, arguing that a referendum was “not the way out”. The only option is elections and, like Ireland and Portugal, to request the obviously necessary changes in the bailout agreement”, he added, referring to proposals by leaders of the two other eurozone Member States that are implementing EU-IMF programmes.

Mr Papandreou said this year he might call a referendum on reforms of Greece’s political system but ruled out a vote on its relationship with the eurozone. His sudden reversal came as a shock, according to party officials. “This is another upset in a situation that is already volatile”, one said.

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