PM wants referendum on constitution

Prime Minister George Papandreou on Sunday proposed a referendum in the fall on a proposal to revise the Greek Constitution, saying that he was prepared to make radical changes to the state system as part of a broader effort to nurse the debt-ridden economy back to health.

Opening a debate in Parliament that is to culminate on Tuesday night with a confidence vote in his newly reshuffled Cabinet, Papandreou said that ?a lack of meritocracy and transparency in the state sector? had contributed largely to the country?s dire economic situation and proposed a referendum on reforms that would overhaul a dysfunctional system. The premier also announced the creation of an independent panel of between 20 and 25 experts who would examine proposals for changes including a reduction to the 300-seat Parliament, the abolition of a law protecting government ministers from prosecution and an overhaul of the electoral system.

Further he said the government had boosted efforts to crack down on tax evasion and was investigating the deposits by Greek citizens in banks in Switzerland. ??We are looking into the issue of the transfer of capital abroad,? he said.

As his newly-appointed Finance Minister, Evangelos Venizelos arrived in Luxembourg for talks with euro zone counterparts that were expected to approve the release of the latest instalment of rescue funding from a bailout agreed last year with Greece's foreign creditors, Papandreou confirmed that talks were continuing on the creation of a second bailout package ?roughly equal? to last year?s package of 110 billion euros.

Despite four unsuccessful appeals to political rivals to join a cross-party consensus on a new austerity program, Papandreou stressed the importance of establishing common ground once again.

??The consequences of a sudden bankruptcy or exit from the euro zone would be immediately disastrous for Greek households, banks, and the country?s credibility,?? he said, appealing to opposition politicians ??to stop fighting in these critical times, stop projecting the image that the country is being torn apart.??

But opposition party leaders appeared unmoved by the overture. Accusing the ruling Socialists of unleashing ?an orgy of populism,? the leader of conservative New Democracy, Antonis Samaras reiterated his calls for early general elections and a renegotiation of the terms of Greece?s agreement with its foreign creditors.

Communist Party (KKE) leader Aleka Papariga also called for snap polls, dismissing the proposal of a referendum as an attempt to ?cheat? the Greek people.

The leader of the far-right Popular Orthodox Rally (LAOS), Giorgos Karatzaferis, condemned the new Cabinet as ?deep PASOK? and insisted on the need for a unity government.

The head of the Coalition of the Radical Left (SYRIZA), Alexis Tsipras, accused the government of fearing elections and described its midterm program - a new raft of tax hikes, spending cuts and privatization - as the ?kiss of death for the Greek people.

An opinion carried out prior to last week?s reshuffle showed that 47.5 percent of respondents want Parliament to reject the reform package and for Greece to hold an early election rather than allow Papandreou to finish his term, which ends in 2013. Just over a third - 34.8 percent - said they want the package approved so Greece can secure a second bailout, according to the poll in daily To Vima?s Sunday edition.

On Sunday night thousands of self-proclaimed ?Indignant? protesters, who have been staging peaceful nightly protests outside Parliament, gathered again to express their opposition to the ongoing austerity drive.