Greece’s PM nears knife-edge vote

Protesters have gathered in central Athens ahead of the vote in parliament

Greece’s PM George Papandreou is hours from a crucial no-confidence vote, with the outcome on a knife-edge.

Mr Papandreou shocked EU partners and sent markets into turmoil after calling for a referendum on a hard-fought EU deal to bail out debt-ridden Greece.

The finance minister said on Friday the referendum had now been scrapped, but even if the PM wins he faces an unclear future, amid new calls to resign.

The developments have overshadowed a key G20 meeting in Cannes.

In Athens, thousands of protesters have gathered in Syntagma Square ahead of the vote, and security has been tightened around the nearby parliament building.

The vote is expected at 22:00 GMT and the final debate got under way shortly after 16:00 GMT.

Mr Papandreou is due to address parliament at 21:30 GMT, but Greek media reported that he may speak earlier.

Eurozone leaders fear that failure to solve the Greek debt crisis could risk it spreading to other vulnerable economies, particularly Italy.

Germany had said a referendum would essentially be a vote on whether Greece wanted to be part of the EU and that the stability of the eurozone was more important than Greek membership.

Motives questioned

The figures in the Greek parliament reveal Mr Papandreou’s vulnerability.

His governing Socialist party (Pasok) holds a tiny majority – 152 out of 300 seats.

A handful of his MPs had indicated they would refuse to back him in the confidence vote.

However, the BBC’s Mark Lowen in Athens says there are suggestions some potential rebel MPs will now support Mr Papandreou after the possibility of a referendum receded.

The vote is timed to take place when the markets in Europe and the US are closed, such is the sensitivity of the issue.

There had been serious divisions in Pasok on the referendum, with Finance Minister Evangelos Venizelos insisting it should not be held.

He told European partners on Friday that Greece had officially scrapped the referendum.

Mr Venizelos said he had informed EU Economic and Monetary Affairs Commissioner Olli Rehn, German Finance Minister Wolfgang Schaeuble and eurozone chairman Jean-Claude Juncker of the decision.

Mr Papandreou had earlier said the referendum was never an end in itself, and there were two other choices – an election, which he said would bankrupt the country, or a consensus in parliament.

He called for talks with the opposition on a coalition government.

The strategy of the main opposition New Democracy is unclear.

Its leader Antonis Samaras on Thursday led his MPs in a dramatic walkout of parliament and called for snap elections.

Mr Samaras questioned the motives behind Mr Papandreou’s actions.

“I am wondering; Mr Papandreou almost destroyed Greece and Europe, the euro, the international stock markets, his own party in order to ensure what? So that he could blackmail me and the Greek public? Or to ensure what I had already said several days ago; that I accept the bailout agreement as unavoidable?”

New Democracy MP Simos Kedikoglou told the BBC’s World Today programme that while it backed adopting the bailout, that did not mean it supported Mr Papandreou remaining prime minister.

So even if Mr Papandreou survives, speculation will mount about his position.

Government sources told Reuters news agency that Mr Papandreou had agreed at a cabinet meeting on Thursday to stand down once he had negotiated a coalition with the opposition.

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One source said: “He was told that he must leave calmly in order to save his party. He agreed to step down. It was very civilised, with no acrimony.”

Health Minister Andreas Loverdos wrote on his blog on Friday that it was “inconceivable” that the government should win the confidence vote “and then pretend that nothing had happened”.

“Unless immediate steps are taken toward the formation of a national unity government, I will no longer wish to take part in that political process,” he said.

European Commission President Jose Manuel Barroso told the BBC’s Today programme he expected a government of national unity to be formed and that the economic problems “will be solved”.

Opinion poll

The G20 met for a second and final day in Cannes on Friday.

UK Finance Minister George Osborne said that it was important for the world to be prepared for whatever happened in Greece.

EU President Herman Van Rompuy said leaders had agreed to increase the firepower of the International Monetary Fund (IMF), but gave no specifics on the funding.

At the end of the first day, the French host, President Nicolas Sarkozy, said France and Germany had helped Greek politicians focus on what was at stake.

Mr Papandreou had been summoned for urgent talks at the G20 on Wednesday, where he was told that any referendum would turn on the question of whether Greece wanted to stay in the eurozone.

The next tranche of Greece’s existing bailout was also put on hold.

Without the bailout funds, Greece will probably go bankrupt before the end of the year.

The EU bailout deal, agreed last month, would give the heavily indebted Greek government 130bn euros (£111bn; $178bn) and it imposes a 50% write-off on private holders of Greek debts, in return for deeply unpopular austerity measures.

Although the Greek public has strongly resisted the austerity measures, a recent opinion poll in a newspaper showed 70% wanted to remain within the eurozone.

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