ATHENS, Greece – Greece’s prime minister abandoned his explosive plan to put a European rescue deal to popular vote Thursday, keeping his government alive. But passionate squabbling in Athens left the country’s solvency in doubt and the eurozone in turmoil.

Prime Minister George Papandreou reversed course after a rebellion within his own Socialist party over the referendum, but ignored repeated calls to resign and call elections.

Chaos persisted in the country that coined the term: Papandreou faces a critical vote of confidence in his government today as the Socialist rebellion still simmers. And the main opposition conservatives were not placated, insisting on his resignation.

Meanwhile, Greece’s cost of borrowing ballooned, with the interest demanded by markets to buy Greek 10-year bonds exceeding 31 percent — compared to 2 percent for European powerhouse Germany.

Papandreou sparked a global crisis Monday when he announced he would put the latest European deal to cut Greece’s massive debts — a hard-fought accord that took months of negotiations — to a referendum. The idea horrified other EU nations, Greece’s creditors and financial markets as investors fretted over the prospect of Greece being forced into a disorderly default.

Papandreou was summoned to an emergency European meeting in Cannes, France, on Wednesday night, where the visibly irate French and German leaders said any referendum would in fact be a question of whether Greece retains its cherished membership of the 17-nation euro common currency. They also put on hold the next, vital payout of Greece’s existing bailout until after a vote was held.

Advertisement

A Greek Finance Ministry official said Greece has cash until mid-December. After that, without the $11 billion disbursement, Greece would most likely be unable to service its debt or pay pensions and salaries.

Finance Minister Evangelos Venizelos accompanied Papandreou to the Riviera but led a revolt against the referendum idea on his return to Athens before dawn Thursday.

The conservative opposition and even Papandreou’s own deputies called for the creation of a transition government to pass the new European debt deal.

“The government went to Cannes with the position that if the necessary consensus is formed there will be no need to hold a referendum,” Venizelos said. “We must highlight the fact that there is a window of a consensus.”

 


Only subscribers are eligible to post comments. Please subscribe or login first for digital access. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.