November 3, 2011
Prime Minister George Papandreou’s ruling party split over his call for a referendum, calling into question whether he will survive as premier after he pledged a vote on whether the country should remain in the euro area.
Finance Minister Evangelos Venizelos led lawmakers opposed to the premier’s surprise decision for a plebiscite after European leaders meeting in Cannes last night cut off aid to Greece. The premier may withdraw the proposal, an official from the ruling Pasok party said as Cabinet ministers met in Athens.
Greek two-year bond yields climbed above 100 percent for the first time after the European Union’s block on further aid raised the specter of a disorderly default as soon as next month. Papandreou’s party diverged over the referendum issue with lawmakers calling for an alliance with the opposition, and other parliamentarians for fresh elections.
“The chances of actually getting to a referendum are looking slimmer and slimmer,” said Stuart Thomson, who helps oversee the equivalent of $121 billion as a fixed-income fund manager at Ignis Asset Management Ltd. in Glasgow. “A country leaving is the ultimate nightmare because it sets a precedent.”
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