Greek leaders have called off a proposed referendum on the latest Eurozone rescue plan in a bizarre and turbulent day in Athens.

Prime Minister George Papandreou, who, according to earlier reports, had agreed to step down and offered up a new coalition, delivered a lengthy and rambling speech before the Greek parliament where he insisted that Greece must accept the bailout or depart the Eurozone.

Reportedly, Papandreou dropped the referendum idea after the principal opposition party New Democracy, agreed to endorse the European Union’s debt deal for Greece.

Analysts in Greece and abroad are speculating that Papandreou floated the referendum notion only as a way to get the opposition to support the rescue package.

Papandreou also shrugged off persistent calls – by both opposition lawmakers and members of his own ruling Socialist Pasok party – to call new elections.

Rejecting the [rescue] plan [through] a ‘no’ vote in a referendum, holding early elections, or not getting a [parliamentary] majority in favor of the package would mean leaving the euro, Papandreou told Pasok party officials.

Greece has to implement the European plan.

He added that snap elections in Greece would be catastrophic.”

Finance Minister Evangelos Venizelos (who is viewed as a rival for Papandreou and reportedly holds ambitions to become Prime Minister) stated his opposition to the referendum and asked Papandreou to officially abandon holding the vote.

Leaders of other European nations, particularly President Nicolas Sarkozy of France and Chancellor Angela Merkel of Germany, expressed their outrage over the referendum proposal.

Meanwhile, Papandreou is still in deep trouble – on Friday, Greece will hold a confidence vote. If it fails, Papandreou’s regime would collapse anyway.

The confidence vote is particularly important and guarantees that decisions taken by the government can proceed, Papandreou told MPs.
“The question was never about the referendum but about whether or not we are prepared to approve the decisions on Oct. 26 [the Brussels summit loan deal]. What is at stake is our position in the E.U.”

Meanwhile, Venizelos is warning that of Greece does not receive the next tranche of bailout cash by the middle of December 15, the country will sink into bankruptcy.