PM ditches referendum, welcomes consensus

Prime Minister George Papandreou said his bid to hold a referendum on Greece?s latest eurozone bailout had generated a ?creative shock? that could lead to a coalition deal with New Democracy.

Speaking to ruling PASOK?s parliamentary group, Papandreou said that talks were under way with the conservative opposition party. The prime minister indicated he was dropping his idea of holding a referendum but insisted he never intended to hold a vote on Greece?s membership of the eurozone, even though that is what he indicated after talks with French President Nicolas Sarkozy and German Chancellor Angela Merkel in Cannes on Wednesday.

The prime minister said that he suggested a plebiscite in last week?s eurozone agreement, which foresees a 50 percent haircut and another 130 billion euros in loans, to emphasize how important the deal was for Greece.

“Rejecting the plan via a no vote in a referendum, holding early elections, or not getting a (parliamentary) majority in favour of the package would mean leaving the euro,» Papandreou told PASOK deputies.

“Greece has to implement the European plan,» he said, referring to a package of measures designed to prevent the debt-wracked economy from bankruptcy. Early elections, however, would be «catastrophic,» he cautioned.

Papandreou called for unity within his party ahead of a crunch confidence vote in parliament on Friday that could spark the fall of the government.

“The confidence vote is particularly important and guarantees that decisions taken by the government can proceed,» said Papandreou.

He appealed for «stability» in his parliamentary group amid a rebellion in the ranks.