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Papandreou Welcomes Opposition Support for Debt Deal

greece debt crisisThe decision by New Democracy party to support the 26th October deal with the EU and IMF to devalue Greece's debt by 100 billion euros is a great one, said Prime Minister George Papandreou, who today lost his parliamentary majority after two PASOK deputies said they would not vote for the government in tomorrow's vote of confidence.

It is the only way to stay in the euro and a vindication of the debt agreement, he said, after an emergency Cabinet meeting in Athens.

Papandreou stood by his decision to offer a referendum to the Greek people on the issue, saying that the only thing on the table will be the debt devaluation, not whether Greece stays in the Eurozone. In a signal that he is prepared to retreat on a referendum, PASOK spokesmen Dimitris Reppas and Nikos Athanassakis will speak to opposition leader Antonis Samaras to decide the next steps on the basis of a wider consensus, said Papandreou. If Samaras supports the government in the November 4th vote of confidence, there will be no need for the referendum, he said.

His announcement has not entirely laid to rest the rumours that he may resign. Earlier today, the beleagured leader held a crisis meeting with his cabinet of ministers, the second in 48 hours. The rumour that Papandreou may resign has been denied by his chief of staff, reports Reuters. However, New Democracy leader Samaras wants an interim government to finalise the October 27th agreement and snap elections, according to Greek state TV.

The BBC reports that Papandreou will stand down today and make way for an interim government headed by former Greek central bank head Lucas Papademou, citing sources in Athens.

Earlier this week, Papandreou proposed the referendum in a surprise move that raised fears of new uncertainty for international markets. He decided to seek support for the EU deal through a vote of confidence in the Hellenic Parliament on November 4th and a referendum from the Greek people set for December or January.

Should Greece leave the Euro and default on its debts, Cyprus banks stand to lose much more than the 50 percent haircut proposed by the EU, and could need a bailout from the government, say analysts.

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