Greece to hold referendum on new debt deal

Taking a huge political gamble, Greece's prime minister announced Monday that his debt-strapped country will hold a referendum on the new European debt deal reached last weekthe first such vote in 37 years.

Prime Minister George Papandreou appeared to take many lawmakers by surprise by saying that a hard-bargained agreement that took months for Europe's leaders to hammer out will be put to a public ballot.

He gave no date or other details on the proposed referendum, which would be the first in Greece since 1974, when the monarchy was abolished by a landslide vote months after the collapse of a military dictatorship.

"This will be the referendum: The citizen will be called upon to say a big 'yes' or a big 'no' to the new loan arrangement," Papandreou told Socialist members of parliament. "This is a supreme act of democracy and of patriotism for the people to make their own decision ... We have a duty to promote the role and the responsibility of the citizen."

The move allows Socialist lawmakerswho have been vilified by months and months of strikes, sit-ins and violent protests over rounds of austerity measuresto pass the responsibility for the country's fate to the Greek people themselves.

Finance Minister Evangelos Venizelos, a constitutional law professor, said the referendum was called after opposition parties repeatedly failed to side with the government in negotiations between Greece and other eurozone members.

"It is very clear: The new agreement will be submitted to parliament for approval and then submitted to the judgment of the Greek people ... the Greek people can of course say 'no' but must bear in mind the consequences of that decision," Venizelos told private Antenna television.

Venizelos indicated the referendum would be held early next year, after weeks of complex negotiations to finalize details of the new agreement.

The new debt deal aims to seek 50 percent losses for private holders of Greek bonds and provide the troubled eurozone member with100 billion ($141 billion) in additional rescue loans.

Government majority reduced

Papandreou's government has seen its majority reduced to just three seats in parliament and its approval ratings plummet amid harsh austerity measures that are sending the country into a fourth year of recession in 2012.

There was no immediate reaction from European leaders, who struggled for months to overcome their differences before reaching the Oct. 26 agreement.

But opposition parties in Greece accused the government of calling the vote to save its teetering government, threatened by growing dissent from Socialist dissenters.

"The prime minister is trying to buy time," said Costas Gioulekas of the conservative New Democracy party said. "We want clear solutions. And a clear solution is obvious: Elections."

Under Greece's constitution, a referendum requires approval by parliament before it is officially declared by the country's president. Gioulekas would not say whether his party would back a "yes" vote.

Support for the Socialists has eroded so much that anti-government protesters forced authorities Friday to cancel an annual military parade to honor World War II veterans, causing deep embarrassment to the government.