November 3, 2011
Amid growing fears of a government collapse in Athens, Prime Minister Giorgios Papandreou on Thursday scrapped plans for a bailout referendum and moved to start talks on a national unity government. He has, however, refused to step down, saying that new elections would mean a Greek exit from the euro zone.
German Chancellor Angela Merkel seems to have gotten her way yet again. Not even a day after she and French President Nicolas Sarkozy suspended aid payments to Greece pending the results of a bailout referendum called by the government in Athens, Prime Minister Giorgios Papandreou has backed away from his plan.
On Thursday, a government spokesman in Athens announced that Papandreou was ceding to demands that he enter into negotiations with the opposition on the formation of a cross-party caretaker government. Shortly thereafter, plans were scrapped to hold the controversial referendum, a decision confirmed by Greek Finance Minister Evangelos Venizelos.
The move comes following a day of intense pressure from members of Papandreou's Socialist Party for the prime minister to resign ahead of a confidence vote that had been scheduled for Friday. With the opposition likewise calling for new elections, it had begun to look doubtful whether Papandreou could have survived such a vote.
A transitional government, it is hoped, would secure the payout of a desperately needed €8 billion ($11 billion) tranche from the European Union aid package passed in early 2010. Following an emergency cabinet meeting on Thursday, Papandreou said he had invited the opposition to join negotiations over a new EU aid package approved at a Brussels summit last week.
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