The French president Nicolas Sarkozy and German chancellor Angela Merkel will hold emergency talks on Wednesday in a desperate attempt to hold the eurozone together and formulate a response to the Greek prime minister's plan for a referendum on the austerity measures imposed by his European partners.
George Papandreou's socialist government is on the brink of collapse after his referendum plan sparked an angry reaction within his own party and plunged Europe back into turmoil, just days after a complex rescue deal had been agreed – requiring Greece to embark on tough cost-cutting measures.
While Papandreou's cabinet approved unanimously his decision to hold a referendum, it threatens to split the prime minister's Pasok party. One MP, Milena Apostolaki, has quit in disgust at the idea of a referendum and several colleagues have said that if it is not abandoned they will join her. Papandreou faces a vote of confidence on Friday. A split in the Pasok party would almost certainly bring down the Greek government, which now has a majority of just two MPs in parliament.
The Greek finance minister, Evangelos Venizelos, who was rushed to hospital before the referendum announcement, said Papandreou had kept him in the dark over his plan to announce a vote. » | Phillip Inman and Helena Smith in Athens | Wednesday, November 02, 2011
