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Greek bailout – and Papandreou's premiership – in jeopardy

The Greek bailout isn't the only thing in doubt after Prime Minister George Papandreou said he will put what Europe took to be a done deal to a referendum. His government could fall this week.

By Correspondent / November 1, 2011

Greek Prime Minister George Papandreou addresses Socialist members of parliament in Athens on Monday. Papandreou says his country will hold a referendum on a new European debt deal reached last week.

Thanassis Stavrakis/AP

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Berlin, Germany

Greek Prime Minister George Papandreou is fighting for his political survival after his call for a referendum on the latest EU bailout package for his country led to a revolt within his own party, the socialist PASOK.

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But outside Greece, after a first wave of anger and irritation from its EU partners, a number of European politicians and economists have declared sympathy for Mr. Papandreou’s decision.

One PASOK MP, Milena Apostolaki, left the parliamentary group earlier on Tuesday. She said she would stay in parliament as an independent member in order to fight the referendum. “I have an obligation to resist this erroneous political choice that divides the nation,” she said. Her defection narrows Papandreou’s already slim majority in the Greek parliament to two votes.

Two other PASOK lawmakers called for a government of "national unity," a coalition including the main opposition party, the center-right New Democracy. Six other leading members of his party asked the prime minister to resign. Papandreou has not just called for a referendum but also announced a confidence vote on his government, to be held either this Thursday or Friday.

That schedule may prove optimistic according to Jason Manolopoulos, managing partner at the investment firm Dromeus Capital. “The talk here in Athens is that Papandreou might not make it through the night. He may resign or be ousted within the next few hours,” Mr. Manolopoulos said. “It’s bizarre, because what he achieved at the summit in Brussels last week was not bad. The debt write-off he got may not be enough, but it was a start. Now Greeks are perplexed by his course.”

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