The Greek prime minister has stunned the world by saying he will put his country’s debt relief deal with the European Union to a public vote and abide by the voters’ decision.
Prime Minister George Papandreou’s announcement sent global stock markets plummeting as investors reacted to a major jolt of uncertainty in the European economy. The Greek government met late Tuesday on plans for the referendum, which Mr. Papandreou says will take place early in 2012.
Reports from Athens say the prime minister has said he will not back down on the referendum issue even though a number of lawmakers in his Socialist Party oppose an up-or-down public vote. Some party members are demanding Mr. Papandreou’s resignation, and his government faces a no-confidence vote Friday in Parliament.
Mr. Papandreou has strongly supported the European Union plan to cut Greece’s debt, which would obligate severe domestic spending cuts and tax hikes. It also would eliminate jobs now held by thousands of public employees.
Terms of the latest deal offered by the EU call for European banks to forgive 50 percent of Greece’s debt. That appeared to calm nervous markets at first, but then Mr. Papandreou told Socialist lawmakers Tuesday that he will abide by results of the referendum, which he calls the command of the Greek people.
If Greeks do not want the current deal with the EU, the prime minister said it will not be adopted.
EU leaders Herman Van Rompuy and Jose Manuel Barroso said they “fully trust” Greece to uphold last week’s eurozone debt-relief agreement. French President Nicolas Sarkozy said letting people vote is “always legitimate,” but that a Europe-wide agreement is the only possible way to resolve the debt crisis.
World Bank president Robert Zoellick said that if voters reject the plan, “It’s going to be a mess.”
Mr. Sarkozy and German Chancellor Angela Merkel plan to meet Wednesday in Cannes, France, with leaders from the International Monetary Fund and Greece to discuss the latest snag in solving the continent’s debt crisis.