Greek PM's future in balance as referendum revolt grows

ATHENS, Nov 3, 2011 (AFP) - Greek Prime Minister George Papandreou's political future hung by a thread Thursday, one day ahead of a confidence vote, as his allies revolted against his plan for a referendum on the euro.

Finance Minister Evangelos Venizelos -- a former challenger for the party leadership -- was among several government officials who came out strongly against the vote, warning it could scupper a hard-gained EU debt rescue deal.

AFP (FILES) Greek Finance minister Evangelos Venizelos

"Greece's place in the euro is a historical conquest by the Greek people that cannot be placed in question ... this cannot be made dependent on a referendum," Venizelos said in a statement after returning from G20 talks in Cannes.

Papandreou, facing mounting social opposition to his austerity policies, this week called for a referendum and a confidence vote to allow him to stay the course without having to resort to early elections as demanded by the opposition.

But the gambit backfired on several fronts.

A socialist deputy defected over the planned referendum, scheduled for December 4, and Papandreou's eurozone peers summoned him to Cannes to stress that Athens should abide by the terms of the bail-out deal if it wants to stay in the euro.

Under pressure for his political survival, the beleaguered PM later told reporters: "This is a question of whether we want to remain in the eurozone. That's very clear."

But as Papandreou flew back to Athens, there were more negative reactions from his allies.

Development Minister Michalis Chrysohoidis insisted that ratifying the EU deal -- designed to slash Greece's huge debt by nearly a third -- was more important, as several junior ministers also voiced their opposition.

"The Greek people must ratify the (EU) agreement ...," deputy finance minister Pantelis Oikonomou told state television NET.

"A referendum on other issues is wrong, it's completely untimely," he said.

European leaders have warned Papandreou that if Greece does not respect the terms of the debt deal hammered out last week by eurozone leaders, it will not get "one more cent" from the next planned instalment of EU and IMF bail-out funds.

German Chancellor Angela Merkel and French President Nicolas Sarkozy said they hoped that Greece would stay on board, but warned that Athens would not get a free ride.

"The Greeks have to decide whether to continue the adventure with us or not," warned Sarkozy. "We hope to continue with the Greeks, but there are rules that have to be respected."

"The Europeans and the IMF can't release the sixth tranche of loans to Greece until Greece endorses the package of October 27," Sarkozy said, calling for the referendum "if one is needed" to be carried out swiftly.

IMF chief Christine Lagarde also warned she would not move on the next tranche of the Fund's loan to Greece until "all uncertainty is removed."

The European leaders pledged to stand by the euro, even if the Greeks were to vote against it.

"If the Greeks say they do not want to stay in the euro, we will accept it, but we will not abandon the euro," Merkel said.

"We do not want to let the euro be destroyed, we do not want to let Europe be destroyed," stressed Sarkozy. "The Greek people are free to choose, but we are accountable for the stability of the eurozone."

Greek officials had previously warned that the country only had enough money to pay its bills until mid-November.

Papandreou claimed in Cannes that Greece had "quite a few days" ahead to pay wages and pensions without resorting to loan funds.

But Venizelos appeared to contradict him, saying in his statement that the loan funds "have to be disbursed without delay."

Venizelos had challenged Papandreou for the party's leadership in 2007.

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