Greece ditches bailout referendum

“The question was never about the referendum but about whether or not we are prepared to approve the decisions on October 26,” he said,referring to the European Union debt deal. “What is at stake is our position in the EU.”

Shortly afterward,the finance minister,Evangelos Venizelos,confirmed the cancellation of the referendum and added that the government would now seek approval of the loan deal from a full majority of 180 in Parliament,rather than the simple majority of 151 that has supported previous measures.

The developments re-established a tentative stability in Greece that still could be dashed. Papandreou must sweat out a vote of confidence scheduled for Friday,the outcome of which is far from assured. If he survives that,he and the opposition leader,Antonis Samaras,will have to negotiate their conflicting visions for the future. Samaras would like to see a transitional government of technocrats leading to early elections,perhaps in two months,while the prime minister prefers a coalition government that would rule for at least six months.

The decision to drop the referendum came after Samaras switched course and decided to back the loan deal,which would involve a 50 percent write down of Greece’s debt. Earlier,Samaras had been content to sit on the sidelines and score political points by opposing the deal and previous bailouts.

Speculation had been rife all day Thursday that Papandreou would abandon the referendum plan if the opposition would back the European deal. Before going into a brief emergency cabinet meeting,Papandreou suggested that he was prepared to walk away from the referendum proposal,saying that it “would not have been necessary if there had been consensus with the opposition.”

At first,Papandreou was said to have offered to resign before the confidence vote on Friday. By late afternoon,however,Greek news media reported during the cabinet meeting that he not only was refusing to resign but was in fact calling off the referendum plan. He only did so later in the day. Papandreou had said the referendum was aimed at broadening consensus,which meant forcing the opposition to back the loan deal. Analysts said that he may have been happy to drop the idea once that goal was accomplished on Thursday.

After the cabinet meeting ended,Papandreou spoke with Samaras by phone.

Even if he survives the coming hours or days in office,the prime minister is widely seen as having expended nearly all his political capital. RACHEL DONADIO & NIKI KITSANTONIS