ATHENS - Taking a huge political gamble, Greece's prime minister announced that his debt-strapped country will hold a referendum on the new European debt deal reached last week -- the first such vote in 37 years.
Prime Minister George Papandreou appeared Monday to take many lawmakers by surprise by saying that a hard-bargained agreement that took months for Europe's leaders to hammer out will be put to a public ballot.
He gave no date or other details on the proposed referendum, which would be the first in Greece since 1974, when the monarchy was abolished by a landslide vote months after the collapse of a military dictatorship.
"This will be the referendum: The citizen will be called upon to say a big 'yes' or a big 'no' to the new loan arrangement," Papandreou told Socialist members of parliament. "This is a supreme act of democracy and of patriotism for the people to make their own decision ... We have a duty to promote the role and the responsibility of the citizen."
The move allows Socialist lawmakers -- who have been vilified by an increasingly hostile public during months of strikes, sit-ins and violent protests over rounds of austerity measures -- to pass the responsibility for the country's fate to the Greek people themselves.
Finance Minister Evangelos Venizelos, a constitutional law professor, said the referendum was called after opposition parties repeatedly failed to side with the government in negotiations between Greece and other eurozone members.
"Greece is living through a drama, from which it must be released by asking the people to express its will," Venizelos told parliament.
"Each citizen will make his own decision, with responsibility, in a process that will provide a national sense of relief and recovery."
Later he told private Antenna television: "It is very clear: The new agreement will be submitted to parliament for approval and then submitted to the judgment of the Greek people ... the Greek people can of course say 'no' but must bear in mind the consequences of that decision."
Venizelos indicated the referendum would be held early next year, after weeks of complex negotiations to finalize details of the new agreement.
The new debt deal aims to seek 50 per cent losses for private holders of Greek bonds and provide the troubled eurozone member with C100 billion ($140 billion) in additional rescue loans.
Papandreou's government has seen its majority reduced to just three seats in parliament and its approval ratings plummet amid harsh austerity measures that are sending the country into a fourth year of recession in 2012.
The EU statistics agency Eurostat estimated in a report issued Monday that unemployment in Greece reached 17.6 per cent in July -- even higher than the Greek estimate for that month of 16.5 per cent.
"This is just the latest twist in the unfolding Greek tragedy," said Sony Kapoor, managing director of Re-Define, a London-based think-tank .
"With an irresponsible opposition that is promising Greek voters the moon, it is very difficult to see how this referendum could be won under the ongoing gut-wrenching austerity."
Eurozone countries struggled for months to overcome their differences before reaching the Oct. 26 agreement -- the second broad agreement reached in four months -- and it is likely to cause major concern for EU officials.
Germany's Finance Ministry noted late Monday that "the summit of the eurozone's heads of states and governments last Wednesday formulated clear expectations. Accordingly, the second aid package for Greece shall be finalized by year's end."
"At the moment we are all working on this with high intensity," it said in a statement.
But it declined to comment directly on the ballot, saying "the announcement of a referendum is a development in Greece's domestic politics on which the (German) government has no information yet."
British Foreign Secretary William Hague said the referendum was "a matter for the Greeks."
"Every country needs to have their own domestic political approach to the problems ... The consequences of a 'yes' or 'no' vote are something that will have to be debated in Greece," Hague told Channel 4 News.
"We look to all the countries in the eurozone to honour the agreements they have entered into."
In Greece, opposition parties accused the government of calling the vote to save its teetering government, threatened by growing dissent from within Socialist ranks.
"The prime minister is trying to buy time," said Costas Gioulekas of the conservative New Democracy party said. "We want clear solutions. And a clear solution is obvious: Elections."
Under Greece's constitution, a referendum requires approval by parliament before it is officially declared by the country's president. Gioulekas would not say whether his party would back a "yes" vote.
Support for the Socialists has eroded so much that anti-government protesters forced authorities Friday to cancel an annual military parade to honour World War II veterans, causing deep embarrassment to the government.
