NEW: The leader of the opposition offers a temporary unity government
Papandreou's finance minister appears to undercut him on holding a referendum
Sarkozy: If referendum fails, Greece must leave the euro zone
There is no way for Sarkozy to make good on the threat, one expert says
Greek Prime Minister George Papandreou is due to meet the president of the country after an emergency meeting of the Cabinet Thursday, Papandreou’s office announced.
Papandreou’s office did not say what he would discuss with President Karolos Papoulias.
But the main opposition leader Antonis Samaras said Thursday he is prepared to enter a coalition government as an interim stage leading to new elections.
The political uncertainty comes as Greece’s debt crisis causes political and financial uncertainty throughout Europe.
Papandreou called an emergency cabinet meeting Thursday morning after the leaders of France and Germany warned that his country would have to leave the euro zone if Greek voters rejected a bailout plan in a referendum Papandreau announced earlier in the week.
French President Nicolas Sarkozy made the threat Wednesday after more than two hours of meetings with Papandreou and German Chancellor Angela Merkel in Cannes, France, as world leaders gathered for an economic summit.
Europe’s common currency has been thrown into crisis by Greek debt and the Greek prime minister’s surprise announcement that his country would hold a referendum on a plan to bail the country out.
Greece’s finance minister delivered a surprise of his own Thursday morning, saying the country’s future “cannot depend on a referendum.”
Evangelos Venizelos said the country had to implement the terms of the deal “now, as soon as possible,” in a statement that appears to undercut the prime minister’s position.
If the Greek people say “No” to the bailout in their referendum, Greece must leave the euro zone, Sarkozy told reporters in this chic resort town on France’s southern coast.
Papandreou expressed optimism Wednesday that the Greek people will support his plan to remain in the euro zone despite having to endure the austerity measures that Greece’s continued membership in the club would require.
The a vote could be held as soon as December 4.
“I believe the Greek people want us to be a strong partner in the euro zone, a strong partner in Europe, and this is at stake,” Papandreou told reporters who had assembled for the G-20 economic summit. “This is at stake,” he repeated.
But Papandreou said the referendum – whose wording he would not discuss – would prove key. “I want to say that we will have a yes,” he said.
But first, Papandreou faces a confidence vote in the Greek Parliament, slated for Friday, that will determine his own political fate. “This is our first battle,” he said. Asked whether he believed he would win, he said, “I do hope so but, obviously, this is a democratic process.”
France and Germany are determined to help Greece, but require that Greece meet its commitments, Sarkozy said, adding that the other members of the euro zone would not allow the euro to be destroyed.
Greek authorities were informed that Europeans and the International Monetary Fund would disburse a sixth tranche of 8 billion euros (about $10.9 billion) only after the uncertainty is ended and the October 27 deal is implemented, Sarkozy said. Greece is now in the last third of its May 2010 bailout, which is worth a total of 110 billion euros (about $151 billion).
Asked whether withholding of the tranche would bankrupt Greece, Papandreou said, “If everything goes well in the referendum, it’s quite a few days before the sixth tranche is needed to pay up salaries and pensions and so on.”
Papandreou did not attend the news conference at which his French and German counterparts spoke.
The tense times in Cannes on Wednesday came the same day Greece’s cabinet voted to support Papandreou’s call for a referendum on the bailout plan.
The vote was unanimous, though some of the ministers expressed criticism prior to casting their votes, CNN affiliate Mega Channel reported.
European Commission President Jose Manuel Barroso appealed Wednesday for national and political unity, saying it would be “critically important to have stability” for the bailout deal to be implemented.
“Without the agreement of Greece to the EU/IMF program, the conditions for Greek citizens would become much more painful, in particular for the most vulnerable. The consequences would be impossible to foresee,” he warned.
Last week’s deal would halve the country’s sky-high debts, but at a price that has led to angry demonstrations in the streets of Greece.
International lenders are demanding that Athens raise taxes, sell off state-owned companies and slash government spending, which would mean firing tens of thousands of state workers.
The deal would wipe out 100 billion euros in Greek debt, half of what it owes to private creditors, and comes with a promise of 30 billion euros from the public sector to help pay off some of the remaining debts, making the whole deal worth 130 billion euros ($178 billion).
The deal was greeted last week with fanfare as a way to keep debt woes in Greece and other European nations from spilling across other borders, threatening the 17 nations united under the euro currency.
The threat to exclude Greece from the euro zone if voters reject the bail out plan might be impossible to put into practice, said one expert on European politics.
“Legally there is no way they can make Greece leave,” said Ramon Pacheco, a lecturer at King’s College London.
“It’s just politics. They can put pressure on Greece, but it’s up to Greece to do what it wants,” he said.
Greece does have the option of leaving the common currency voluntarily, he said.
“There is no legal provision that says you cannot leave the euro. It is up to Greece to be in or leave,” he said.
CNN’s Ali Velshi in Cannes, CNN’s Laura Smith-Spark and Tom Watkins, and Journalist John Psaropoulos in Athens contributed to this story.