ATHENS, Greece (AP) — Ignoring increasing calls to step down, Greece’s prime minister announced Thursday he would seek emergency talks with the opposition conservatives after they agreed to back the latest European bailout for Greece.
Prime Minister George Papandreou, speaking at an emergency Cabinet meeting, warned that an early election was too dangerous because it would force Greece into leaving the 17-nation euro currency.
Papandreou sparked a continentwide crisis Monday when he announced he would put the latest European deal to cut Greece’s massive debts — an accord that took months of negotiations — to a referendum. The idea horrified other EU nations and Greece’s creditors, triggering turmoil in financial markets as investors fretted over the prospect of Greece being forced into a disorderly default.
Two officials close to Papandreou said Thursday the referendum idea has now been scrapped, after the debt deal won some support from the opposition.
“Elections as a solution, today and at this moment, would mean a much greater danger of bankruptcy and of course exit from the euro,” the prime minister declared in the meeting. “I will talk to (opposition leader) Mr. Samaras so that we can examine the next steps, based on a wider consensus.”
He declared that he was pleased “because even if there is no referendum” he was glad that all the discussion “has at least brought many people toward a rational view” of Greece’s dire economic situation.
The drama Thursday in Greece sent immediate ripples throughout Europe. Premier Silvio Berlusconi’s government in Italy was teetering as well after it failed to come up with a credible plan to deal with its dangerously high debts, and Portugal demanded more flexible terms for its own bailout. The European Central Bank made a surprise decision to cut interest rates by a quarter of a percentage point to 1.25 percent, responding to the financial turmoil.
The topic of what to do about Greece dominated the G-20 meeting in the French resort of Cannes, where the leaders of the world’s economic powerhouses had gathered to solve Europe’s debt crisis, which threatens to push the world back into recession.
Prior to Papandreou’s emergency meeting, several Greek lawmakers had called for a coalition unity government that would approve the bailout package without a referendum and make sure the country receives vital funds to prevent bankruptcy.
Thursday’s turmoil began after Papandreou’s own finance minister, Evangelos Venizelos, broke ranks with him Thursday and declared his opposition to a referendum.