Papandreou Officially Scraps Referendum

Greek Prime Minister George Papandreou has called off his plan to hold a referendum just three days after its announcement rocked global markets.

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In an address to his party’s central committee on Thursday evening, Papandreou said there was no need for a referendum now that the opposition New Democracy party said it would back the debt deal, which includes deeply unpopular austerity measures. He invited the party to become “co-negotiators” on the deal.

“The question was never about the referendum, but about whether or not we are prepared to approve the decisions on October 26,” he said, referring to the European Union debt deal hammered out by euro-zone leaders in Brussels last week. “What is at stake is our position in the EU.”

Shortly following Papandreou’s speech, Greek Finance Minister Evangelos Venizelos said, “The government announces formally that we are not carrying out a referendum.”

On Monday, Papandreou announced plans to hold a referendum on deeply unpopular austerity measures, allowing the public to decide whether to move forward with budget cuts that threaten economic growth for the sake of reducing the deficit and securing another bailout package.

Greece’s troika of lenders — the European Union, European Central Bank, and International Monetary Fund — have made the cuts a condition of Greece’s next bailout package, and would likely withhold the funds the country needs in order to avoid default if Greece were to renege, though it would increase the risk of contagion for other euro-zone nations, namely Italy.

Earlier today, the Associated Press cited two unnamed officials close to Papandreou who said the referendum would be scrapped. However, Papandreou was also said to have offered his resignation, a report that was later denied. Greek news media later reported during a meeting of Papandreou’s cabinet today that the prime minister was refusing to resign, and first broke news that he was calling off the referendum, though he only did so later in the day.

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Papandreou doesn’t consider himself to be back-stepping, telling his cabinet today that the “referendum proposal would not have been necessary if there had been consensus” with the opposition, according to a newly released transcript of the speech. With the opposition having conceded, all parties can now move forward, unified in their intentions.