Greek referendum: Papandreou losing MPs' support

Greek Prime Minister George Papandreou (2 Nov 2011) Mr Papandreou's referendum plan has failed to win the support of many of his MPs

Greek PM George Papandreou appears to be heading for defeat in a confidence vote after growing opposition within his own party to a surprise referendum call on the EU bailout plan.

Mr Papandreou's Pasok party holds a slim majority, 152 out of 300 seats.

The Greek cabinet is now meeting in emergency session.

The row threatened to overshadow a meeting of the G20 in Cannes, where leading industrialised nations are to discuss the eurozone debt crisis.

Greek state television says Mr Papandreou will meet Greek President Karolos Papoulias immediately after the cabinet talks.

The BBC's Mark Lowen, in Athens, says Mr Papandreou is expected to offer a coalition government with a former vice-president of the European Central Bank, Lucas Papademos, at the helm.

Mr Papandreou himself is expected to step aside, our correspondent says.

He says three Pasok MPs have now said they will not vote for Mr Papandreou in the confidence motion on Friday.

Several others, including government ministers, have criticised the referendum plan, calling instead for Mr Papandreou to resign or for a government of national unity.

Mr Papandreou's chief of staff said on Thursday the prime minister had not and would not resign, the Reuters news agency says.

Repercussions

On Monday, Mr Papandreou shocked European leaders and financial markets by calling a vote on the eurozone bailout plan.

He told reporters at the G20 in Cannes: "This is a question of whether we want to remain in the eurozone. That's very clear."

However, a spokesperson for the European Commission told reporters in Brussels that Greece would have to leave the EU if it left the euro.

"The treaty doesn't foresee an exit from the eurozone without exiting the EU," a Commission spokeswoman said.

Earlier, the chairman of the group of eurozone countries, Jean-Claude Juncker of Luxembourg, said plans were in place for a Greek exit from the euro.

"We are absolutely prepared for the situation that I have described and do not want to see come about," Mr Juncker told German ZDF television.

Early on Thursday, Finance Minister Evangelos Venizelos spoke out publicly against the idea of a referendum. He is a longtime rival to Mr Papandreou and a former Pasok leadership candidate.

Mr Venizelos was followed by the deputy finance minister, the health minister and the development minister, says the BBC's Mark Lowen, in Athens.

In a statement early on Thursday, Mr Venizelos said Greece's membership of the euro could not be put in doubt.

At the scene

Events here are moving fast. Four ministers, including the finance minister, have said they do not support the prime minister's referendum plan. At least three governing party MPs say they will not back the government in Friday's confidence vote.

That deprives George Papandreou of a majority in parliament. If he cannot muster the support of enough opposition MPs, he will lose the vote, the government will collapse and early elections could be called.

Greece is now entering a period of intense political instability to add to its financial woes.

"If we want to protect the country we must, under conditions of national unity and political seriousness and consensus, implement without any delay the decision of 26 October. Now, as soon as possible," Mr Venizelos said.

Eurozone leaders had hoped to present a definitive action plan for Greece, including a move by wealthy emerging economies such as China to contribute to expanding the European Financial Stability Fund (EFSF).

On 26 October, eurozone countries agreed to give Greece a second bailout of 130bn euros (£111bn; $178bn). Private banks would also write off 50% of the Greek state debts they hold.

In return, Greece must enact austerity measures, cutting wages and salaries, and making thousands of civil servants redundant.

Mr Papandreou plans to put the bailout to a popular vote on 4 or 5 December. However, our correspondent says the idea of a referendum is now in doubt, as the collapse of the government would trigger early elections.

Several Pasok MPs have called instead for a parliamentary vote on whether to accept the bailout terms, a government of national unity or early elections.

Another has called on Mr Papandreou to resign.

Greek parliament graphic

The EU says it will not disburse rescue funds until after the referendum.

Our correspondent says Mr Venizelos' statement exposes a rift at the very heart of the Greek government.

One of Mr Venizelos' advisers told the BBC the minister did not approve of the referendum and does not consider it a priority.

On Wednesday, Mr Papandreou said that his shock decision to call a national vote on the bailout package was effectively a decision on the country remaining part of the euro bloc.

Mr Venizelos travelled to Cannes on Wednesday for meetings at the G20 summit of leading industrialised countries.

He issued his statement upon his return to Athens at 04:45 (02:45 BST).

Greece was due to receive the next tranche of funds from its first bailout later this month. However, the EU has said it will not transfer the 8bn euros (£6.88bn; $10.9bn) until after the referendum.

As a result, Greece may confront difficulties paying pensions and salaries.

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