May 25, 2011
The Greek government scrambled to resolve a standoff with its opposition over austerity on Wednesday, with one official warning the only alternative to more cuts was leaving the euro and bringing back the drachma.
Athens denied reports it was poised to call a referendum on Prime Minister George Papandreou's new savings plan, which foresees up to 11.5 billion euros in state asset sales by the end of next year, and said it was still seeking a consensus on the deeply unpopular steps.
The showdown in Greece underscored rising political hurdles to an orderly resolution of the debt crisis that has plagued the 17-nation currency zone for the past 18 months and forced bailouts of Greece, Ireland and now Portugal.
It has also raised the risks that EU leaders could be forced to explore new, potentially more radical, policy options for dealing with Greece's massive debt load, though they continue to rule out a coercive restructuring out of fear it would unleash a contagion tsunami, engulfing big countries like Spain or Italy.
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