Greek debt crisis: Papandreou drops plan for bailout referendum

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REPORTING FROM ATHENS AND LONDON -- Greek Prime Minister George Papandreou said Thursday that he is dropping his controversial plan to hold a referendum on membership in the euro currency zone and on the latest European bailout plan for Greece.

His announcement, made to The Times inside the Greek Parliament in Athens, followed an emergency Cabinet meeting Thursday afternoon, which he convened after a number of his own ministers came out against the plebiscite.

The proposed referendum caused a political and financial firestorm at home and abroad when Papandreou put it forward earlier this week. But at a meeting with fellow European leaders in Cannes, France, on Wednesday, he was warned that Greece faced a stark choice of whether to stick with them on the path of European unity or go it alone.

The proposed referendum also caused an uproar within Greece and inspired a revolt against Papandreou within his Socialist party.

Anna Diamantopoulou, the Greek education minister, said Papandreou came into Thursday’s Cabinet meeting offering to withdraw his call for a plebiscite.

Another senior minister said of the referendum: ‘It can’t walk.’

But Papandreou resisted calls from the opposition and some of his own party members to resign. He is scheduled to meet with fellow Socialist party lawmakers later Thursday, and if he survives, he is expected to press ahead with a vote of confidence in the Greek parliament on Friday.

Senior ministers said Papandreou would be making overtures to the main opposition party, New Democracy, about the possibility of a national unity government.

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-- Anthee Carassava in Athens and Henry Chu in London