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Greek PM Papandreou faces party revolt over bailout Greece's Papandreou in crisis talks over bailout revolt
(40 minutes later)
  
Six leading members of Greece's governing Pasok party have called on Prime Minister George Papandreou to resign, the day after he called a referendum on the proposed EU bailout. Greece's government is holding an emergency meeting following a day of turmoil triggered by PM George Papandreou's announcement of a referendum on the proposed EU bailout.
One MP has defected from Pasok, cutting Mr Papandreou's parliamentary majority to two seats - 152 out of 300 - ahead of a confidence vote on Friday. One MP from the governing Pasok party has resigned, cutting Mr Papandreou's parliament majority to two.
The opposition has called for early elections, saying the referendum jeopardises Greece's EU membership. Six other leading party members have called on him to resign.
European markets have fallen sharply. US and European markets, calmed by last week's EU bailout plan, have fallen sharply since the announcement.
The Greek government also faces a crucial confidence vote in parliament on Friday.
News of the referendum even took Greece's Finance Minister Evangelos Venizelos by surprise, Greek media reported.
As the latest crisis unfolded, it was announced that Mr Papandreou would meet German Chancellor Angela Merkel and French President Nicolas Sarkozy along with leaders of the EU, the International Monetary Fund (IMF) and eurozone leaders on the fringes of the G20 summit in Cannes on Wednesday.
The Greek opposition has called for early elections, saying the referendum jeopardises Greece's EU membership.
Mr Papandreou says he needs the backing of a referendum to successfully implement the tough reforms demanded by international lenders.
He has, however, ruled out elections.
Last week, eurozone leaders agreed on a 100bn-euro loan (£86bn; $140bn) to Athens and a 50% debt write-off.Last week, eurozone leaders agreed on a 100bn-euro loan (£86bn; $140bn) to Athens and a 50% debt write-off.
In return, Greece must make deep cuts in public spending, slashing pensions and wages and making thousands of civil servants redundant.In return, Greece must make deep cuts in public spending, slashing pensions and wages and making thousands of civil servants redundant.
'Blackmail' On Tuesday, Pasok MP Milena Apostolaki quit the parliamentary group in protest but said she would keep her seat to fight the referendum as an independent.
Earlier on Tuesday, Pasok MP Milena Apostolaki quit the parliamentary group but said she would keep her seat to fight the referendum as an independent.
"I have an obligation to resist this erroneous political choice that divides the nation," she said."I have an obligation to resist this erroneous political choice that divides the nation," she said.
Shortly afterwards, another MP from Mr Papandreou's centre-left Pasok party, Vasso Papandreou (no relation) called for a government of national unity, to be followed by snap elections. Shortly afterwards, another MP from Mr Papandreou's centre-left Pasok party, Vasso Papandreou (no relation), called for a government of national unity, to be followed by snap elections.
"I call on the president to convene the council of political leaders with the goal of forming a government of national salvation in view of safeguarding the EU package agreed on 27 October, and then to immediately hold elections," said Ms Papandreou, who chairs the parliamentary committee on economic affairs."I call on the president to convene the council of political leaders with the goal of forming a government of national salvation in view of safeguarding the EU package agreed on 27 October, and then to immediately hold elections," said Ms Papandreou, who chairs the parliamentary committee on economic affairs.
Antonis Samaras, leader of the main opposition New Democrats, met Greek President Karolos Papoulias for talks on Tuesday morning.
"In order to save himself, Mr Papandreou has posed a dilemma of blackmail that puts our future and our position in Europe in danger," Mr Samaras said after the meeting.
European markets have fallen sharply since the announcement of a Greek referendum.
It is clear that the decision to hold a referendum in Greece on the deal done five days ago came as a complete surprise to the German government.It is clear that the decision to hold a referendum in Greece on the deal done five days ago came as a complete surprise to the German government.
Rainer Bruederle, one of the leading politicians of the governing parties in the Bundestag said: "This sounds to me like someone trying to wriggle out of what was agreed - a strange thing to do."Rainer Bruederle, one of the leading politicians of the governing parties in the Bundestag said: "This sounds to me like someone trying to wriggle out of what was agreed - a strange thing to do."
He was economics minister until recently and said it was now necessary to prepare for Greece to go insolvent. He said if Greece didn't fulfil its agreement "Europe would have to consider turning off the flow of money which was keeping Greece afloat".He was economics minister until recently and said it was now necessary to prepare for Greece to go insolvent. He said if Greece didn't fulfil its agreement "Europe would have to consider turning off the flow of money which was keeping Greece afloat".
Chancellor Merkel and President Sarkozy talked on the phone and then agreed to meet in Cannes the day before the G20 is due to start.Chancellor Merkel and President Sarkozy talked on the phone and then agreed to meet in Cannes the day before the G20 is due to start.
A terse joint statement made no reference to the referendum, saying baldly: "France and Germany are determined to ensure the full implementation in the quickest time frame, the decisions adopted at the (EU) summit."A terse joint statement made no reference to the referendum, saying baldly: "France and Germany are determined to ensure the full implementation in the quickest time frame, the decisions adopted at the (EU) summit."
There is much dismay in government circles and a sense that the deal that was done with such difficulty may now be unravelling at great consequence to Europe and its citizens.There is much dismay in government circles and a sense that the deal that was done with such difficulty may now be unravelling at great consequence to Europe and its citizens.
Mr Papandreou is to hold talks on Wednesday with German Chancellor Angela Merkel and French President Nicolas Sarkozy along with leaders of the EU, the International Monetary Fund (IMF) and eurozone leaders on the fringes of the G20 summit in Cannes. Antonis Samaras, leader of the main opposition New Democrats, met Greek President Karolos Papoulias for talks on Tuesday morning.
"In order to save himself, Mr Papandreou has posed a dilemma of blackmail that puts our future and our position in Europe in danger," Mr Samaras said after the meeting.
Mr Papandreou's office said that in a phone call with Chancellor Merkel earlier on Tuesday, the Greek prime minister had insisted the referendum would "strengthen" Greece in the eurozone and globally.Mr Papandreou's office said that in a phone call with Chancellor Merkel earlier on Tuesday, the Greek prime minister had insisted the referendum would "strengthen" Greece in the eurozone and globally.
President Sarkozy and Chancellor Merkel earlier issued a joint statement saying they were "determined to ensure with their European partners the full implementation, as quickly as possible, of decisions taken by the (EU) summit, which today are more necessary than ever".President Sarkozy and Chancellor Merkel earlier issued a joint statement saying they were "determined to ensure with their European partners the full implementation, as quickly as possible, of decisions taken by the (EU) summit, which today are more necessary than ever".
"France and Germany are convinced that this agreement will allow Greece to return to sustainable growth.""France and Germany are convinced that this agreement will allow Greece to return to sustainable growth."
The head of the Athens Chamber of Commerce, Constantine Michalos, told the BBC he thought the decision to hold a referendum was a "suicidal" move.
"I've always indicated that the last thing the Greek economy needs is an early election - however after this totally irresponsible political move I don't think there is any other solution at the moment.
"We saw the financial markets literally crumble, the Greek stock market has had an absolute battering and of course the euro has dropped. So a lengthy period of non-government will be disastrous not just for the Greek economy but overall for the European economy."
The next Greek elections are not scheduled until 2013.The next Greek elections are not scheduled until 2013.
Opinion polls in Greece show that most people do not support the austerity deal. The most recent general strike, on 19-20 October, brought tens of thousands out on to the streets nationwide.Opinion polls in Greece show that most people do not support the austerity deal. The most recent general strike, on 19-20 October, brought tens of thousands out on to the streets nationwide.
No date for the referendum has yet been announced, but Mr Papandreou indicated it would take place in a few weeks' time, once the details of the bailout package have been finalised.No date for the referendum has yet been announced, but Mr Papandreou indicated it would take place in a few weeks' time, once the details of the bailout package have been finalised.
He also ruled out early elections, saying they would be negative for the country.
Mr Papandreou has called a vote of confidence in his government for Friday.Mr Papandreou has called a vote of confidence in his government for Friday.
Meanwhile, Greek Finance Minister Evangelos Venizelos was taken to hospital on Tuesday morning, suffering from stomach pains. Meanwhile, Mr Venizelos was taken to hospital on Tuesday morning, suffering from stomach pains. His office said he was likely to be released by the evening.
His office said he was likely to be released by the evening.
Mr Venizelos was given no warning that Mr Papandreou intended to call a referendum, an anonymous government official told the Reuters news agency, on condition of anonymity.Mr Venizelos was given no warning that Mr Papandreou intended to call a referendum, an anonymous government official told the Reuters news agency, on condition of anonymity.
"Venizelos had no idea about the referendum. All he knew about was the vote of confidence," he said."Venizelos had no idea about the referendum. All he knew about was the vote of confidence," he said.
"He told Papandreou he should inform foreign partners and a letter was drafted in the early hours.""He told Papandreou he should inform foreign partners and a letter was drafted in the early hours."