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Greek crisis: Papandreou 'to offer to resign'

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Greek Prime Minister George Papandreou is expected to offer his resignation within the next half-hour, sources in Athens have told the BBC.

Mr Papandreou will meet Greek President Karolos Papoulias immediately after an emergency cabinet meeting has finished.

He is expected to offer a coalition government, with former Greek central banker Lucas Papademos at the helm.

But state TV reported that Mr Papandreou insisted during the meeting that he would not resign.

The Greek government was on the verge of collapse after several ministers said they did not support Mr Papandreou's plan for a referendum on the EU bailout.

The BBC's Mark Lowen in Athens says that whatever the outcome Greece has been thrown into a period of intense political instability.

The bailout would give the heavily indebted Greek government 130bn euros (£111bn; $178bn) and a 50% write-off of its debts, in return for deeply unpopular austerity measures.

On Thursday, main opposition leader Antonis Samaras of the centre-right New Democracy party called for a caretaker government to safeguard the EU deal.

Mr Papandreou had called a vote of confidence for Friday. His Pasok party holds a slim majority, 152 out of 300 seats.

However, he was faced with a parliamentary revolt after several of his MPs withheld their backing. Some called for early elections or a government of national unity instead.

One Pasok rebel MP, Eva Kaili, told the BBC: ''I think now the only solution is to have a new government of national rescue and co-operation led by a person that is recognised by the majority [as] prime minister and tries to uphold the agreement [on the EU bailout] of 26 October."

The row threatens to overshadow a meeting of the G20 in Cannes, where leading industrialised nations are to discuss the eurozone debt crisis.

Mr Papandreou told reporters in Cannes his referendum would in effect be a vote on whether Greece should remain in the euro.

But the European Commission said if Greece left the European single currency, it would have to leave the European Union as well.

"The treaty doesn't foresee an exit from the eurozone without exiting the EU," spokeswoman Karolina Kottova told a briefing in Brussels.

Earlier, the chairman of the group of eurozone countries, Jean-Claude Juncker of Luxembourg, said plans were in place for a Greek exit from the euro.

"We are absolutely prepared for the situation that I have described and do not want to see come about," Mr Juncker told German ZDF television.

Greek Finance Minister Evangelos Venizelos launched the parliamentary revolt in the early hours of Thursday with a statement saying Greece's membership of the euro could not be put in doubt.

"If we want to protect the country we must, under conditions of national unity and political seriousness and consensus, implement without any delay the decision of 26 October. Now, as soon as possible," Mr Venizelos said.

Mr Venizelos is a former challenger for the Pasok leadership. In 2004, he was defeated by Mr Papandreou by 56% to 38% in a party vote.

Greece was due to receive the next tranche of funds from its first bailout later this month. However, the EU has said it will not transfer the 8bn euros until after the referendum.

Source: BBC

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