Greek politicians signal support for tough bailout plan

ATHENS — Greek Prime Minister George Papandreou backed away Thursday from a proposal to hold a referendum on a European bailout plan, removing a significant obstacle that had rattled global markets and imperiled plans to halt a spreading economic crisis.

In a day filled with political intrigue and drama, Greek politicians for the first time coalesced around the rescue deal after the opposition dropped its objections. But the plans still require Parliament’s approval, and politicians remained at odds over whether Papandreou would stay or go. The opposition has called for elections by the end of the year, which Papandreou opposes, suggesting that the deal could still fall apart.

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Demands mounted Thursday for Greek Prime Minister George Papandreou to resign and let a coalition government approve a European bailout plan instead of holding a risky referendum on it. (Nov. 3)

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However the situation is resolved, it seems unlikely that Greece’s participation in the bailout will remain unsettled for more than a month, as had earlier appeared to be the case. Instead, European leaders can move on to other pressing issues, such as how to bolster Europe’s bailout fund to guard against shakiness in Italy and Spain.

Papandreou’s proposal to hold a national referendum on the bailout plan, a vote that would also determine Greece’s future in the euro zone, had caused fissures within his Socialist party and sent shock waves through Europe. In Frankfurt, Germany, the European Central Bank said it would lower interest rates by a quarter percentage point, indicating deep concerns about Europe’s outlook. In Cannes, France, where leaders at the Group of 20 summit had warned they would cut off all support to Greece until the referendum was resolved, the drama dominated discussions.

In a speech to Socialist party officials Thursday evening, Papandreou said shooting down the bailout plan “means leaving the euro.”

“If the opposition is willing to negotiate, then we are ready to ratify this deal and implement it,” he said, adding that he had invited the main opposition party to be “co-negotiators” with his country’s creditors.

After he spoke, Finance Minister Evangelos Venizelos said the Socialists would ask for 180 votes in Parliament, rather than a simple majority of 151 votes, to approve the package. Those moves would need to come before Greece runs out of money, which is pegged for mid-December, but would probably come as soon as the two main political parties reach terms.

Papandreou’s plan for a national bailout referendum had effectively halted the flow of European aid to Greece and endangered the country’s participation in the euro zone. The move away from the referendum stemmed from the opposition’s new willingness to agree to a bailout, as well as intense disagreements within Papandreou’s party.

Papandreou told his fellow Socialists that he trusts “the wisdom and the maturity of the Greek people . . . more than what is now called the political establishment.”

The most immediate question was whether Papandreou would survive a confidence vote Friday. The Socialists have a majority of just two votes in the legislature, and one Socialist lawmaker said Thursday that she would not vote to retain the prime minister.