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Greek Government Teeters Ahead of Confidence Vote

November 3, 2011 at 12:00 AM EDT

JEFFREY BROWN: It was a long day of political turmoil in Greece, with broader implications for Europe and the world.

Under heavy pressure, Prime Minister George Papandreou scrapped plans to have his citizens vote on a new European bailout. He also managed to stay in power, at least for one more day.

We have two reports from Independent Television News, beginning with James Mates in Athens.

JAMES MATES: The changing of the guard outside the presidential palace in Athens goes on whatever political crisis is raging in the capital. But there was to be no ceremonial handover inside today.

For several hours, the press had waited for Greece’s prime minister to come here to resign. Tonight, he is still clinging on, though the referendum planned that put Europe into such turmoil is now dead.

From early morning, his M.P.s, even cabinet ministers who filed into a hastily arranged emergency meeting had been telling the prime minister to back down. Suddenly, Greece’s membership of the euro, even of the EU itself, seemed to be at risk, and that had put the whole establishment here into headlong retreat.

Prime Minister Papandreou told his ministers the referendum threat had been a gambit to force the opposition into supporting the painful bailout plan. Whether that’s true or not, it has had that effect. Suddenly, a swingeing austerity package looks certain to pass.

When the Greeks adopted the euro almost 10 years ago, they were so determined to dispatch the drachma to history that they actually put up a memorial in its memory here in the center of Athens. So when France and Germany last night suggested they may have to go back to this, well, they peered nervously over the edge of that abyss and quickly withdrew.

As for the Greek people, who for 48 hours looked likely to be asked their opinion, there was little joy to be found on the streets today.

WOMAN: It sucks. What else I can say? It is a pity for Greece, this situation.

WOMAN: And it’s all based for local advantage among the different political parties, and nobody — nobody’s looking really at the interests of the eurozone, nor really at the interests of the long-term interests of the country.

JAMES MATES: Prime Minister Papandreou addressed his parliamentary party tonight, making it clear he’s not going anywhere, and hoping to bring the opposition fully on board with what Europe’s demanding.

GEORGE PAPANDREOU, Greek prime minister (through translator): We would never raise euro membership as a referendum question. We believe that’s evident. But if we don’t meet our obligations, euro membership is at stake.

JAMES MATES: Outside, the protesters were beginning to gather once again in Athens’ central square. They had been pretty quiet these last few days, but votes on another round of government spending cuts are certain to see them back in force.

MARGARET WARNER: Papandreou will need the support of opposition Conservatives to survive a no-confidence vote tomorrow. But they walked out of Parliament today, demanding the prime minister resign and call quick elections.

The Greek drama was closely watched at the G20 summit in France.

Gary Gibbon reports from Cannes.

GARY GIBBON: The Eurozone leaders who are here at the G20 gathered to talk about what they must do now to convince the world’s markets that some of their biggest economies can’t go bust.

Last night, Chancellor Merkel and President Sarkozy sent the Greek prime minister, George Papandreou, packing back to Athens. They told him his country could soon be bankrupt and friendless, evicted from the euro and the EU. By phone, they told his opposition party the same.

NICOLAS SARKOZY, French president (through translator): I don’t want to give any idea that we’re trying to get involved in Greek domestic politics. But if we’re talking about defending the eurozone, the euro and Europe, then that’s our obligation, our duty.

GARY GIBBON: Was he pondering the lost dream of a summit that was supposed to be a showcase for France, a moment when the world’s 20 strongest countries shaped a new, better world economy?

Instead, today, the Eurozone crisis smothered everything. Leaders checked their BlackBerrys throughout the meeting for the latest news from Greece.

MAN: I think that he’s offered his — he’s offered his resignation.

GARY GIBBON: Actually, he hadn’t. Many leaders, including David Cameron, called for the IMF to boost its bailout strength and insisted that it wasn’t an admission that the European bailout fund wouldn’t be up to the job. But if they can agree billions more available from the IMF by tomorrow to bail out debt-ridden countries, everyone knows who’s on their mind.

DAVID CAMERON, British prime minister: When the world is in crisis, it’s right that you consider boosting the IMF, the International Monetary Fund, an organization founded by Britain, in which we’re a leading player.

And no government ever lost money by lending money to the IMF that supports countries right around the world. But what we wouldn’t support is the IMF investing directly in some euro bailout fund. That wouldn’t be right, and we won’t back it.

GARY GIBBON: They hope that, when their meeting finishes tomorrow, they will be able to announce a new figure for the IMF’s lending power, a number with a lot of zeros attached, a giant anti-anxiety pill, they hope, for the market.