CANNES, France (MNI) – Greece’s government appeared to be on the
brink of collapse Thursday after Finance Minister Evangelos Venizelos
openly split with Prime Minister George Papandreou over the plan for a
referendum in early December to decide whether Greece will stay in the
Eurozone.

In the pre-dawn hours of Thursday, Papandreou stepped out of a
meeting here with fellow European leaders to announce he would hold a
referendum on December 4 and that the question would be Greece’s future
as a Eurozone member. Venizelos accompanied Papandreou on the trip, but
returned shortly afterwards to Athens where he issued a written
statement distancing himself from Papandreou’s decision.

“Greece’s place in the euro is a historic achievement that cannot
be put into question,” Venizelos said. “This established right of the
Greek people cannot be put under scrutiny in a referendum.” He urged
implementation “as soon as possible” of the new rescue plan for Greece
unveiled by Eurozone leaders at their summit on October 27.

The fresh political turmoil comes just one day before a decisive
confidence vote on Papandreou’s government to be held in Greek
Parliament Friday night. With Papandreou clinging to a tenuous majority
of 152 seats in the 300-seat chamber, two more deputies from his ruling
Socialist party said they would not support the idea of a referendum,
though they stopped short of defecting from the party. Thus it remains
highly uncertain whether Papandreou will have the votes to win the
confidence motion.

It is also far from clear whether the referendum will actually
happen, since it requires parliamentary approval in order to proceed,
and numerous Socialist MPs would likely join the opposition in blocking
it. If Papandreou’s government falls, the referendum will be moot.

Meanwhile, talk of a Greek exit from the Eurozone has intensified,
and the possibility explicitly acknowledged for the first time by senior
European leaders. Eurogroup President Jean-Claude Juncker told a German
news station early Thursday that preparations were underway for the
possibility that Greece might leave the single currency bloc.

“We are working on the subject of how to ensure there is not a
disaster for the people in Germany, Luxembourg, the Euroone,” Juncker
said. “We are absolutely prepared for the situation which I describe and
which I want to be avoided.”

In a press conference late Wednesday night, France’s President
Nicolas Sarkozy and Germany’s Chancellor Angela Merkel both said they
were prepared to see Greece leave the euro area if that is what the
Greek people decided.

“We want to continue with the Greeks, but there are rules and it is
unacceptable that these rules are not followed,” Sarkozy said.

Papandreou was headed back to Athens today, where he has convened
an emergency cabinet meeting. Afterwards, he will meet with the MPs from
his governing party.

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