Greek Prime Minister Under Pressure To Resign

The government led by Greek Prime Minister George Papandreou could collapse within the next few hours.

Sources are telling the BBC that Papandreou is about to resign. Reuters says that senior “ruling party” lawmakers are urging the prime minister to step down. The Financial Times reports that:

“Speculation is rampant that when Papandreou meets the [Gree] president he’s going to offer to step down and ask for a coalition government to be formed. But the FT‘s Kerin Hope in Athens says, after speaking to a senior member of the ruling Socialist party, that there have been such rumours before — that he would step down in favour of a national unity government. But that didn’t happen.”

And The Associated Press says that “Greece’s embattled Socialist government was on the point of imploding Thursday as a revolt against Prime Minister George Papandreou’s planned referendum on the country’s hard-won international bailout package gathered pace.” The wire serve adds that:

“His shock referendum decision Monday angered European leaders and many of his own party lawmakers, several of whom have called for the prime minister to step down and a cross-party national unity government to be created in order to safeguard the bailout. Speculation that the referendum pledge may be abandoned alongside a caretaker government has helped calm frayed nerves in the markets.”

As Marketplace Morning Report‘s Stephen Beard said today, if a referendum is held and Greeks vote “no,” the country would “likely default [on its debts] and possibly crash out of the eurozone, with unpredictable consequences for the global economy.”

We wrote yesterday that leaders of other European nations told Papandreou that Greece would not get its next aid installment — $11 billion — unless the austerity measures are OK’d. The BBC’s Justin Rowlatt said on Marketplace yesterday that “if there’s no Greek rescue, then there’s likely no stomach — not to mention not enough money — for an Italian rescue, or Spain, and so on down the line.”

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