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Greek referendum decision dismays Europe, investors

November 1, 2011 |  5:05 am

Greek Prime Minister George Papandreou announced he would put the Eurozone's new bailout package to a referendum
REPORTING FROM LONDON -- European stocks dived Tuesday and the continent's leaders were reportedly dismayed by Greek Prime Minister George Papandreou's announcement that he would put the Eurozone's new bailout package to a referendum.

Papandreou appeared to surprise even his own party's lawmakers Monday when he said that Greeks ought to vote on the debt-crisis rescue plan cobbled together last week after intense negotiating among Europe's leaders. A poll published in a Greek newspaper over the weekend showed that a majority of respondents opposed the deal, putting the outcome of a referendum -- probably to be held no earlier than January -- in doubt.

The political gamble sent stock markets tanking Tuesday, erasing many of the gains they had made during the short-lived euphoria that greeted the rescue plan.

"Greeks plunge Europe into new crisis," the German tabloid Bild said in a headline on its website, adding that the 17-nation Eurozone was "in a state of shock."

It quoted Rainer Bruederle, a ranking member of the junior party in the German ruling coalition, as saying that he was "irritated" by the referendum decision and that Papandreou's behavior was "peculiar."

German Chancellor Angela Merkel and French President Nicolas Sarkozy, the chief architects of the rescue deal, are reportedly to speak to each other later Tuesday about Papandreou's decision.

In France, lawmaker Christian Estrosi told France Info radio that the Greek leader's announcement was "totally irresponsible" and "incomprehensible when we know how hard it was for Nicolas Sarkozy and Angela Merkel to pass a courageous plan. I deplore this decision."

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-- Henry Chu

Photo: Greek Prime Minister George Papandreou at the Parliament in Athens on Monday. Credit: John Kolesidis / Reuters

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