LibriumArcana.Games

Greek Finance Minister Evangelos Venizelos has come out against holding a referendum on the euro zone bailout, a ministry source said on Thursday, breaking ranks with his prime minister as the government faces collapse.

A lawmaker of Prime Minister George Papandreou's socialist party PASOK said she would not support the government in a parliamentary vote of confidence on Friday, cutting its majority for the vote to just one. Snap elections would probably follow if Papandreou's majority vanished.

PASOK was in turmoil on Thursday with one senior lawmaker calling for a government of national unity following Papandreou's shock call for the referendum on the 130 billion-euro rescue for Greece, and another saying he should resign.

"I don't think the government will last until tonight," said Costas Panagopoulos, Managing Director of pollsters ALCO.

Venizelos, one of the most powerful men in the PASOK government, originally supported Papandreou's plan. His change of mind came after he attended an emergency summit in Cannes on Wednesday when the leaders of France and Germany made clear Greece would have to leave the euro zone if voters rejected the bailout, which demands yet more deep austerity.

The finance ministry source told Reuters on condition of anonymity that Venizelos believed the vote on the bailout, agreed by euro zone leaders only last week, should not be held while immediate funding to keep Greece afloat still had to be secured.

PAPANDREOU'S MAJORITY SHRINKING

"Under these conditions a referendum is exactly what the country does not need. He would not have objections if all our pending issues such as the loan installment and the completion of the bailout plan had been sorted out," the source told Reuters.

"It was a very difficult meeting," the source added, referring to talks with German Chancellor Angela Merkel and French President Nicolas Sarkozy.

Papandreou's bombshell announcement on Monday of the referendum and parliamentary vote of confidence plunged Greece into a political as well as an economic crisis.

Papandreou's once-comfortable majority has dwindled to almost nothing. On Thursday PASOK lawmaker Eva Kaili announced she would stay in the party but refused to support the government in the crucial vote expected late on Friday.

"Herewith I inform you that I am not resigning as an elected representative of my fellow citizens and my generation, but in Friday's vote I will not cast a vote of confidence in your government," she said in a letter to the speaker of parliament, a fellow PASOK member.

Kaili published the letter on her Facebook page.

This left Papandreou with the support of just 151 deputies out of 300 for Friday's vote.

PASOK lawmaker Costas Gitonas also said the referendum should not take place. "No, by no means," he told Mega TV. "It's a madhouse."

Athens (CNN) -- Greek Prime Minister George Papandreou is backing off plans to hold a controversial referendum on an international bailout for his country, he told his Cabinet Thursday, saying there was no need for it given opposition support for the tough austerity measures that accompany it.

It was not immediately clear if that meant he was canceling the referendum, the announcement of which sent European politics and markets into chaos.

Meanwhile, Papandreou's office said he is prepared to enter a national unity government with the opposition, but is not willing to hold early elections -- a condition opposition leader Antonis Samaras attached to his offer of a unity government earlier Thursday.

The prime minister is not planning to resign, his office said.

Papandreou's office is now denying earlier statements that he was going to meet the president of the country, news which sparked speculation about a possible resignation.

The prime minister held an emergency cabinet meeting Thursday as the country lurched into crisis over whether it would take bailout money to pay off its sky-high debts.

The political uncertainty comes as Greece's debt crisis causes political and financial jitters throughout Europe.

The leaders of France and Germany warned that Greece would have to leave the euro zone if Greek voters rejected the bailout plan in the referendum Papandreou 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 taken a battering by Greek debt and the Greek prime minister's surprise announcement that his country would hold the referendum.

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.

Papandreou was due to face 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."

At least three members of Papandreou's party have said this week they no longer back him, but he has the support of one independent, giving him a one-vote majority in Parliament.

It is not clear how Thursday's political confusion in Athens will affect either the confidence vote or the referendum.

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 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."

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 agreement for private lenders to scrap half of Greece's debt is worth 100 billion euros to Athens, 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.