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Greek crisis: Papandreou promises referendum on EU deal | |
(40 minutes later) | |
Greece will hold a referendum on a new European Union aid package intended to resolve the country's debt crisis, Prime Minister George Papandreou says. | Greece will hold a referendum on a new European Union aid package intended to resolve the country's debt crisis, Prime Minister George Papandreou says. |
Last week eurozone leaders agreed on a 100bn-euro loan (£86bn; $140bn) to Athens and a 50% debt write-off, in a effort to tackle the euro crisis. | Last week eurozone leaders agreed on a 100bn-euro loan (£86bn; $140bn) to Athens and a 50% debt write-off, in a effort to tackle the euro crisis. |
But there have been large-scale protests in Greece against austerity measures demanded by the EU. | But there have been large-scale protests in Greece against austerity measures demanded by the EU. |
Analysts say a referendum could derail the wider deal on the euro debt crisis. | Analysts say a referendum could derail the wider deal on the euro debt crisis. |
The Greek rescue package is a key part of the agreement reached last week after marathon talks between eurozone leaders. | The Greek rescue package is a key part of the agreement reached last week after marathon talks between eurozone leaders. |
They said banks holding Greek debt accepted a 50% loss, the eurozone bailout fund will be boosted to about 1tn euros and banks will have to raise more capital. | They said banks holding Greek debt accepted a 50% loss, the eurozone bailout fund will be boosted to about 1tn euros and banks will have to raise more capital. |
The Greek plan has rattled the financial markets. | |
The FTSE 100 in London opened 2.2% lower, the Dax in Frankfurt fell 3.5% and the Cac-40 in Paris dropped 3.4%. | |
This came in the wake of sharp falls on Monday, when the main European indexes closed lower by around 3%. | |
In Asia on Tuesday, the main indexes in Japan, Hong Kong and Australia all closed down by at least 1.4%. | |
'Final say' | |
Opinion polls in Greece show that most people do not support the austerity deal. | Opinion polls in Greece show that most people do not support the austerity deal. |
Mr Papandreou told a meeting of his governing Socialist party that Greek people would have the final say on the package, which is designed to reduce Greek debt by about 100bn euros. | Mr Papandreou told a meeting of his governing Socialist party that Greek people would have the final say on the package, which is designed to reduce Greek debt by about 100bn euros. |
"The command of the Greek people will bind us", he was quoted as saying by AFP news agency. | "The command of the Greek people will bind us", he was quoted as saying by AFP news agency. |
He set no date for the referendum, but indicated that it would be held after details of the deal have been finalised with the EU and the country's creditors. | He set no date for the referendum, but indicated that it would be held after details of the deal have been finalised with the EU and the country's creditors. |
It is a big gamble for Mr Papandreou, who will argue that it is in Greece's national interest to support the deal, the BBC's Europe editor Gavin Hewitt reports. | It is a big gamble for Mr Papandreou, who will argue that it is in Greece's national interest to support the deal, the BBC's Europe editor Gavin Hewitt reports. |
But our correspondent says that many people in Greece say they prefer the chaos of default to years of hardship. | But our correspondent says that many people in Greece say they prefer the chaos of default to years of hardship. |
The junior party in Germany's governing coalition has criticised the referendum plan. | The junior party in Germany's governing coalition has criticised the referendum plan. |
The parliamentary leader for the Free Democrats, Rainer Bruederle, said a No vote would mean the Greek government was declaring bankruptcy. | The parliamentary leader for the Free Democrats, Rainer Bruederle, said a No vote would mean the Greek government was declaring bankruptcy. |
"This sounds to me like someone is trying to wriggle out of what was agreed - a strange thing to do," he told the Deutschlandfunk radio network. | "This sounds to me like someone is trying to wriggle out of what was agreed - a strange thing to do," he told the Deutschlandfunk radio network. |
It is a big gamble by the Greek prime minister. | |
He will argue that it is in Greece's national interest to support the deal. | |
Without it, he will say, the country faces default and catastrophe. | |
He will base his campaign on an appeal to patriotism. | |
But on recent visits I have found many people would prefer the chaos of default to years of hardship. | |
The referendum is another hurdle for the eurozone to get over, says the BBC's Matthew Price, in Brussels. | The referendum is another hurdle for the eurozone to get over, says the BBC's Matthew Price, in Brussels. |
It comes at a bad time for the eurozone and those who hoped the crisis was being contained, he adds. | It comes at a bad time for the eurozone and those who hoped the crisis was being contained, he adds. |
Last Friday, there were protests in several cities around Greece. | Last Friday, there were protests in several cities around Greece. |
An important annual parade was cancelled in Thessaloniki after demonstrators blocked the route and shouted insults at President Karolos Papoulias. | An important annual parade was cancelled in Thessaloniki after demonstrators blocked the route and shouted insults at President Karolos Papoulias. |
Socialist dissenters | Socialist dissenters |
Many Greeks believe the government has gone too far in allowing the EU and the International Monetary Fund (IMF) to dictate the austerity measures needed to secure the bailout. | Many Greeks believe the government has gone too far in allowing the EU and the International Monetary Fund (IMF) to dictate the austerity measures needed to secure the bailout. |
Mr Papandreou has also faced growing dissent from within his own Socialist party over the impact of the measures. | Mr Papandreou has also faced growing dissent from within his own Socialist party over the impact of the measures. |
The party's approval ratings have plunged and its parliamentary majority has been cut by several defections to other groups. | The party's approval ratings have plunged and its parliamentary majority has been cut by several defections to other groups. |
Analysts say the promise of a referendum allows Mr Papandreou's government, which has born the brunt of public anger over the austerity measures, to pass responsibility for the country's future to the Greek public. | Analysts say the promise of a referendum allows Mr Papandreou's government, which has born the brunt of public anger over the austerity measures, to pass responsibility for the country's future to the Greek public. |
"The new agreement will be submitted to parliament for approval and then submitted to the judgment of the Greek people," Finance Minister Evangelos Venizelos told the Antenna TV channel. | "The new agreement will be submitted to parliament for approval and then submitted to the judgment of the Greek people," Finance Minister Evangelos Venizelos told the Antenna TV channel. |
"The Greek people can, of course, say no but must bear in mind the consequences of that decision." | "The Greek people can, of course, say no but must bear in mind the consequences of that decision." |
Opposition parties said the government had only announced the referendum to avoid having to call an early general election. | Opposition parties said the government had only announced the referendum to avoid having to call an early general election. |
"The prime minister is trying to buy time," said Costas Gioulekas from the right-of-centre New Democracy party. | "The prime minister is trying to buy time," said Costas Gioulekas from the right-of-centre New Democracy party. |
"We want clear solutions. And a clear solution is obvious: elections." | "We want clear solutions. And a clear solution is obvious: elections." |