Greece in turmoil over debt plan, but markets rise

November 4, 2011 • World News

Greek Prime Minister George Papandreou returns to an emergency cabinet meeting after he took a short break at the Greek parliament in Athens, on Thursday, Nov. 3, 2011. A spokesman for Greece’s government says it is prepared to discuss an opposition demand for the creation of a transitional government to approve the latest European bailout deal and secure the next installment of rescue loans for the country. (AP Photo/Thanassis Stavrakis)

ATHENS, Greece (AP) — Greece was in turmoil and the world economy in limbo Thursday as a high-stakes game of political brinkmanship in Athens led Prime Minister George Papandreou to abandon his explosive plan to put a European rescue deal to a referendum.

The dramatic developments overshadowed the G20 summit of world leaders in the French resort of Cannes, where President Barack Obama implored European leaders to swiftly work out a eurozone plan to deal with the continent’s crisis, which threatens to push the world back into recession.

Papandreou sparked a global crisis this week when he announced plans to put the latest European deal to cut Greece’s massive debt — a hard-fought accord that took months of negotiations — to a popular vote. The idea horrified other EU nations, Greece’s creditors and financial markets as investors worried over the prospect that Greece could be forced into a disorderly default.

Faced with mounting opposition at home and abroad, Papandreou withdrew the referendum call after the main opposition conservatives indicated they backed the debt deal. With them potentially on board, his finance minister argued, there was no longer a need to put the issue to the Greek people.

Stocks rose sharply in the United States and Europe on news the referendum plan had been Login to read more

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