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Greeks Plan Bailout Referendum


Greek Prime Minister George Papandreou's decision to call on referendum on the bailout package has raised fresh concerns over Europe's debt crisis.
Greek Prime Minister George Papandreou has unexpectedly announced plans for a referendum on the bailout deal struck last week by EU states eager to help Greece avoid default.

Global financial markets plummeted on reports of the Greek plan for the popular vote.

Eurozone leaders recently agreed to provide Athens a second, 130 billion-euro bailout and a 50-percent write-down on its enormous debt.

Papandreou said he needed wider political support for the reforms demanded by international lenders.

"This is the highest form of democracy," Papandreou said. "It is a great moment of patriotism for the citizens to decide, so let us then give the final word to the people and let the citizens decide -- to decide not for people and parties, but for the fate and course of the country."

In a joint statement, EU President Herman van Rompuy and European Commission head Jose Manuel Barroso said, "We fully trust that Greece will honour the commitments undertaken in relation to the euro area and the international community."

Alexander Stubb, Finland's minister of European affairs, said earlier that a Greek referendum on the bailout deal would essentially be a vote on Greece's eurozone membership.

Several members of Papanderou's ruling Socialist Party have defected as the party pushes austerity measures through parliament while protesters rally outside.

Reports say the referendum is likely to be held early next year and will be only the country's second in almost 40 years.

Analysts are split on whether Greek voters will accept the deal, but many suggest that a damaging month or two of market volatility lies ahead.

The immediate market reaction to the announcement was negative, the euro extending losses against the dollar and tumbling more than 2 percent to a session low.

compiled from agency reports

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