Greek PM pledges debt referendum

Embattled Greek Prime Minister George Papandreou on Monday called for a confidence vote and a referendum on last week's EU debt deal, taking a political gamble to silence growing opposition to his policies.

"On this roadmap of political initiatives I ask for a confidence vote," Papandreou told his Socialist party lawmakers in parliament, moments after he announced a referendum would also be held on the EU deal.

"An expression of confidence in the policy to be followed is more necessary than ever," Papandreou said, adding that the referendum expected early next year would be a "cornerstone" to build a "new era" for Greece.

Papandreou, who has 153 deputies in the 300-seat parliament, has faced increasing dissent within his own party over the tougher austerity policy monitored by the EU and the International Monetary Fund that has sparked general strikes and widespread protests, many of them violent.

"The command of the Greek people will bind us," the premier said.

"Do they want to adopt the new deal, or reject it? If the Greek people do not want it, it will not be adopted," the prime minister said after protests around the country last week against his government's austerity policies.

The confidence vote is expected to be held on Friday.

The EU agreement brokered last week is designed to cut Greece's debt load of over 350 billion euros ($495 billion) by around 100 billion euros.

It was only reached after months of haggling in marathon talks last Thursday and besides the Greek debt reduction included measures to bolster the European banking system, help other struggling eurozone member states and boost the size of the bloc's bailout funds.

NEGOTIATIONS

Papandreou's gambit come as Greece faces delicate negotiations with its eurozone peers on the details of last week's agreement and with global bankers asked to accept a 50-percent loss on their Greek debt holdings.

Veteran political analyst Ilias Nikolakopoulos termed it "a panic reaction" and a "dangerous" decision by the Socialist leader whose approval ratings are at historic lows.

Public anger showed itself again on Friday as parades were held to mark Greece's wartime resistance to Nazi Germany and Fascist Italy.

President Carolos Papoulias walked out on a military parade in the northern city of Thessaloniki when hecklers labelled him a 'traitor' and other officials in other cities were also insulted.

Finance Minister Evangelos Venizelos indicated the referendum was hastened by political opposition at home to last week's EU deal.

"Even such a deal is placed in question by some," Venizelos told parliament, arguing that something had to give so that progress could be made.

Successive efforts by Papandreou in recent months to gain support from his domestic political rivals to boost Greece's bargaining powers in Brussels have failed.

The finance minister later added that the referendum would be held after the details of the EU agreement are worked out, a process expected to culminate in early 2012.

"An application law (on the EU deal) will come to parliament and will also be put before the people," Venizelos said.

In Greece, many people believe the country has gone too far in allowing the EU and IMF to dictate economy policy in return for two bailout deals which have cost several hundred billion euros so far.

The opposition parties frowned on the government's move.

The main opposition New Democracy conservatives called Papandreou "ruthless" and "dangerous," accusing him of throwing Greece's EU future "in the air like a coin."

"This is raw blackmail, we should have elections now," Makis Mailis, a spokesman for the third-ranking Communist party, told private Mega channel.

Papandreou had previously pledged to hold a referendum in the autumn "on the great changes of this land."

But he has consistently ruled out holding early elections, which many analysts have warned would fail to produce a strong majority in parliament and plunge the country in political uncertainty.

"We have two years of productive work ahead of us. We say no to elections at this stage because they would constitute a plain subterfuge," Papandreou said.