Papandreou calls off Greek referendum

CANNES, France, Nov. 3 (UPI) -- Greek Prime Minister George Papandreou said Thursday it would not be necessary for voters to approve a $178 billion EU bailout in a referendum.

Papandreou's proposal Monday to let the people decide whether to accept Europe's latest rescue plan or leave the eurozone stunned members of his Parliament, who would have to approve the referendum to let it go forward. Speaking late Thursday to leaders of his party, Papandreou said approval of the plan by the rival New Democracy Party meant Greece could accept the EU bailout without putting it before voters.

He said he was not resigning, but would be willing to leave office to allow for formation of a unity government -- but only if his government wins a confidence vote expected to be held Friday, The New York Times reported.

Papandreou spokesman Elias Mosialos hinted earlier in the day the referendum may not be held, after the major opposition in Parliament accepted the loan agreement, capital.gr reported.

Kathimerini reported Thursday officials from the New Democracy Party were expected to meet with government officials to discuss formation of a transitional government after the ruling party came out against Papandreou's proposed referendum.

"The new government that will emerge from this election will unite the people ... so that the country can come out of the crisis," New Democracy leader Antonis Samaras said.

European leaders Thursday withheld an overdue $11 billion loan payment to Athens, demanding Greece first make clear its eurozone intentions.

French President Nicolas Sarkozy and German Chancellor Angela Merkel said around midnight Wednesday they would deny Greece the money, which it needs by mid-December, unless the referendum -- now in doubt -- resulted in a swift yes.

"Does Greece want to remain part of the eurozone or not -- that is the question the Greek people must now answer," Merkel said in Cannes, France, hours before the start of the annual Group of 20 summit of large developing and industrialized nations.

Sarkozy and Merkel told Papandreou the $178 billion rescue plan, 50-percent write-off debt restructuring plan and painfully deep austerity measures eurozone leaders agreed to last week after painstaking negotiations were not negotiable, the leaders said.

Resolving Europe's debt crisis is the top priority for Group of 20 leaders meeting in France to discuss the global economy, President Obama said Thursday.

"I think it's no surprise that we spent most of our conversation focused on strengthening the global economic recovery so that we are creating jobs for our people and stabilizing the financial markets around the world," Obama said in a media appearance with Sarkozy after the two leaders met in Cannes. "The most important aspect of our task over the next two days is to resolve the financial crisis here in Europe."