Crisis in Greece may fell gov't, break euro

Greek government on verge of collapse over referendum that could force Greece out of euro zone.

By REUTERS
November 3, 2011 14:40
2 minute read.
A protest in Athens [file]

Athens protest 311 R. (photo credit: REUTERS/John Kolesidis)

 
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ATHENS - Greek Prime Minister George Papandreou's government appeared on the verge of collapse on Thursday after his call for a referendum triggered a revolt within his party and raised the prospect that the country could be forced to quit the euro zone.

With his ambitious finance minister breaking ranks with him and his parliamentary majority evaporating fast, Papandreou looks unlikely to survive the day with his job intact.

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He has called an emergency cabinet meeting, ahead of a confidence vote in parliament on Friday. He has a majority of 152 in the 300-seat parliament and some ruling party lawmakers have openly called on him to quit.

He is also under pressure from European allies, who have warned the country will not receive any more aid until it ratifies a 130-billion-euro bailout package agreed last month.

Greece's conservative opposition leader on Thursday called for a caretaker government to lead the country until snap elections are held, saying the present parliament should ratify a bailout package agreed last month.

Antonis Samaras, head of the New Democracy party, said a vital sixth tranche of aid from foreign lenders to keep Greece afloat should be released as soon as possible and before snap elections are held.

Samaras, whose party is expected to win the largest share of votes if elections were held now, said he would not back down from his demand for new elections.

"I'm asking for the formation of a temporary, transitional government with an exclusive mandate to immediately hold elections. And the ratification of the bailout deal from the current parliament," he said in a statement.

A small group of senior Greek ruling party lawmakers are preparing a proposal for a coalition government headed by former European Central Bank Vice President Lucas Papademos, sources in Prime Minister George Papandreou's party told Reuters on Thursday.

The group is trying to convince Papandreou to quit and leave the way for Papademos, a respected figure in Greece, to head a so-called "unity" government that takes Greece back from the brink of financial collapse.

Papandreou has come under growing pressure to quit after his plan for a referendum on the country's bailout lifeline sparked anger from European partners and prompted speculation that Greece could be forced to leave the euro zone.

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