Greek FinMin distances himself from referendum

November 3, 2011 - 4:15 AM
Greece Financial Crisis

FILE - In this Oct. 31, 2011 file photo, Greek Finance Minister Evangelos Venizelos reacts during speech of Greek Prime Minister George Papandreou to the Socialist members of parliament in Athens. Venizelos was breaking ranks early Thursday, Nov. 3, 2011 with Papandreou over his call to hold a referendum on a hard-fought European debt deal to rescue the country's economy. (AP Photo/Thanassis Stavrakis, File)

ATHENS, Greece (AP) — Greece's finance minister broke ranks with his prime minister Thursday by insisting that his country's participation in the eurozone cannot depend on a referendum.

Evangelos Venizelos said the country's attention should be focused on getting a crucial installment of bailout funds quickly, which has been delayed because of Prime Minister George Papandreou's surprise decision to back a referendum into a bailout package agreed just a week ago.

"Greece's position within the euro area is a historic conquest of the country that cannot be put in doubt," Venizelos said in a statement issued shortly after his return from Cannes in the early hours of Thursday, where he accompanied Papandreou.

Venizelos said Greece's participation in the eurozone and EU membership "cannot depend on a referendum."

Venizelos' comments comes a day before the Greek government faces a parliamentary vote of confidence.

On Monday, Papandreou shocked his European partners — and his own Socialist deputies — when he announced he would hold a referendum on a hard-fought European deal agreed only last Thursday. The decision sent shockwaves through financial markets as investors fretted over a disorderly Greek debt default and its possible exit from the euro.

As well as triggering renewed fears over the global economic outlook, tje announcement has led to a political crisis in Greece. Papandreou's parliamentary majority has now been reduced to just two seats in the 300 member legislature after one deputy defected. Other governing Socialist party deputies have called openly for the premier to step down and a cross-party government of national unity to be formed.

Papandreou was summoned to an emergency meeting in Cannes, France, on Wednesday, where the French and German leaders said a Greek plebiscite should decide on whether the country stays in the eurozone, and that Athens would not get critical bailout funds until after the vote.

An initial date of Dec. 4 has been suggested for the vote. But Greece has said that without the next euro8 billion installment of its existing bailout fund, the country runs out of funds in mid-November.

"Greece's position within the euro area is a historic conquest of the country that cannot be put in doubt," Venizelos said in a statement issued shortly after his return from Cannes in the early hours of Thursday, where he accompanied Papandreou. "This acquis by the Greek people cannot depend on a referendum."

Venizelos said it was important for the next bailout installment to be disbursed "without any distractions or delay." The next step, he said, was to activate the new debt deal for Greece.

That deal would supply Greece with an extra euro100 billion ($138 billion) in rescue loans from the rest of the eurozone and the IMF — on top of the euro110 billion it was granted a year ago — and would see banks forgive Athens 50 percent of the money it still owes them.

Other ministers and governing Socialist party deputies seemed to also distance themselves from the prime minister's referendum idea.

Development Minister Michalis Chrisohoidis issued a statement calling for unity, and saying the priority was for parliament to ratify the new debt deal.

"There can be no... return to the drachma and the past," Chrisohoidis said. "We must all assume our responsibilities."

Venizelos accompanied Papandreou to the emergency meeting despite having been hospitalized the previous day with abdominal pain, saying he did so "because I think that this was my national duty."

Although he had defended Papandreou's decision to hold a referendum in a speech delivered immediately after the premier's announcement on Monday, an official close to the minister has said Venizelos had not been told in advance that Papandreou was to announce a public vote.

The minister "found out about it along with all other Greeks" during Papandreou's speech, which was televised live, the official told The Associated Press on Tuesday. He spoke on condition of anonymity to discuss sensitive issues.

Speaking in Cannes, Papandreou said he was forced to call the referendum after it became clear there was no "broad support" from opposition parties for the bailout deal reached with the rest of the eurozone and big banks just a week ago.

Turning the referendum into a popular vote on whether Greece wants to remain in the eurozone is a risky bet that could lead to turmoil throughout the bloc.

"We cannot permanently ride a rollercoaster on Greece; we have to know where things are going, and the Greeks have to tell us where they would like things to go," Jean-Claude Juncker, the Luxembourg prime minister who chairs eurozone finance ministers' meetings, told Germany's ZDF television Thursday.

"I am very decidedly of the opinion that everything must be done so that one euro country does not leave the 17 — but if that were the wish of the Greeks, and I would find that wrong, we cannot force the Greeks," he added.

"If the Greeks make clear via a referendum that they would feel better outside the eurozone than inside the eurozone, then this is a Greek decision, then our Greek friends have to describe the way by which they want to get out of the eurozone," Juncker said.

In case Greece does leave, Juncker said Europe has to make plans so other eurozone countries don't suffer.

"We are absolutely prepared for the situation that I have described and do not want to see come about," Juncker said. "This is not just about Greece, it is also about possible dangers of contagion for others, and we will do everything ... to arrange the firewalls against the danger of contagion in such a way that the eurozone as a whole does not skid."

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Associated Press writer Geir Moulson in Berlin contributed.