Greece's government 'won't survive the night'

The Greek government teetered on the brink of collapse on Thursday over plans for a referendum on a eurozone bailout with turmoil in the ruling party casting grave doubt on whether Prime Minister George Papandreou and his government can survive a confidence vote.

Conservative opposition leader Antonis Samaras demanded that a transitional government be formed immediately to run the country until snap elections, with the current parliament ratifying the financial rescue for debt-choked Greece.

State television and the state ANA news agency said that Papandreou would meet the Greek president after an emergency Cabinet session on Thursday, without giving further details.

Papandreou would have to submit his resignation or a request for a unity government to President Karolos Papoulias.

Won’t resign
Papandreou’s chief-of-staff denied the prime minister intended to resign, although sources within his PASOK socialist party said some senior lawmakers wanted a Greek former top official at the European Central Bank (ECB) to head a new government.

“I don’t think the government will last until tonight [Thursday],” said Costas Panagopoulos, managing director of pollsters ALCO.

Papandreou’s surprise decision to call a referendum on the €130-billion bailout to save Greece from bankruptcy and prevent a global financial crisis provoked an uproar at home and across the eurozone.

Rejection of the package, which includes yet more austerity measures for the long suffering Greek electorate, would unravel the eurozone’s plan for tackling its wider debt crisis and cut off Greece’s international financial lifeline.

Finance Minister Evangelos Venizelos broke ranks with Papandreou, coming out against holding the referendum after a bruising meeting with the German and French leaders, who made it clear that Greece would not receive a cent more in aid until it votes to meet its commitments to the eurozone.

‘Referendum is dead’
Chaos over Greece’s role in the eurozone swept financial markets with early losses in stocks and the euro turning to gains on hopes Athens might ditch its referendum plans.

The Greek stock exchange rose 4% on speculation the referendum would be abandoned. World stocks, as measured by MSCI, were flat after earlier being sharply lower.

In Europe, the FTSEurofirst 300 lost 1% initially but later stood close to 1% percent higher. Earlier, Japan’s Nikkei closed down 2.2%.

“The referendum is dead,” Greek ruling party lawmaker Nikos Salayannis said on state radio.

The spectre of a hard Greek default and euro exit hung over a meeting of G20 leaders beginning in Cannes on Thursday.

The French Riviera summit had been meant to focus on reforms of the global monetary system and steps to curb speculative capital flows but the shockwaves from Greece have upended the global talks.—Reuters

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