Greek people to decide on European debt deal in a surprise referendum

Greece is to hold a referendum on the new European debt deal reached last week. Prime minister George Papandreou gave no date or other details of proposed referendum.

The deal aims to seek 50 per cent losses for private holders of Greek bonds and provide the troubled eurozone member with €100 billion (£87bn) in additional rescue loans.

Mr Papandreou told Socialist members of parliament he would seek a vote of confidence in parliament.

His Socialist government has seen its majority reduced to just three seats and its approval ratings plummet, amid harsh austerity measures that are likely to send the country into a fourth year of recession in 2012.

Mr Papandreou appeared to take many by surprise by saying that a hard-bargained agreement that took months for Europe’s leaders to hammer out would be put to a public ballot. It would first referendum in Greece since 1974, when the monarchy was abolished.

“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,” he said. “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 politicians – who have faced months of strikes, sit-ins and violent protests – to pass the responsibility for the country’s fate to the Greek people.