Athens, Greece (AHN) – The 50 percent cut in the Greek debt is not yet a done deal. Greek Prime Minister George Papandreou submitted the European Union-crafted deal to Greeks on Monday for a referendum vote.
Papandreou, who is aware that the austerity measures that comes with the reduction of Greek debt are not popular with his own party members and citizens, said the decision to adopt or reject the deal rests with Greeks. If they are not in favor of it, then Athens has no choice except to turn it down.
The referendum is scheduled in January. Survey results indicate that 60 percent of the country’s voters would reject the EU debt solution.
A no vote would once more throw the eurozone into crisis. Among the consequences of rejecting the deal are a full-scale default, ejection from the zone, running out of money to pay public employees and failure to deliver basic services if the troika made up of the International Monetary Fund, European Union and the European Central Bank decide not to lend more money to Greece.
It would also throw to the wind the agreements crafted by EU leaders in Brussels this week, which did not come easy because of German opposition to some of the provisions of the deal.
Markets reacted to Papandreou’s submission of the deal to a referendum. The euro slipped 2 percent against the dollar and the U.S. volatility index went up 22 percent.
Papandreou also announced to parliament that the Socialist party would submit itself to another vote of confidence. The party’s majority has been reduced to three seats and its approval rating has fallen to an all-time low due to the unpopular austerity measures.
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