Stock markets around the world plunged today after Greek Prime Minister George Papandreou said he will hold a high risk referendum on the country's participation in the European bailout package.
Papandreou's shocking announcement created turmoil in the markets as well as in Greece's Parliament where several members defected from the ruling party and threatening it with collapse.
The announcement also sent European leaders scrambling to understand the decision. French President Nicolas Sarkozy is holding an emergency meeting of top government ministers to discuss the Greek prime minister's dramatic decision.
The move by Papandreou stunned Greeks because of the stakes involved in his gamble. A ''no'' vote could mean Greece will default on its debt and could decide whether it remains in the 17 nation Euro currency union. More importantly if the vote is not passed it could plunge world markets into further financial turmoil.
Greek lawyer Thassos Petropolous told ABC News that the referendum will undermine last week's Euro Zone summit, saying "What happens if voters say no? It will be a disorderly default straight away and Greece will go back 50 years."
In a recent political survey done by Kapa Research, 60 percent of Greek citizens opposed the recent bailout deal, suggesting that people would rather continue with the strikes and protests that have plagued the country for months rather than face years austerity measures. In the same poll, 46 percent said they would vote against the plan at a referendum.
The Greek parliament is due to vote on the aid package that was approved just at the eleventh hour by European Union leaders during a crucial meeting in Brussels last week. The deal involves a bailout worth €130 billion ($180 billion) as well as banks agreeing to take 50 percent losses on their holdings of Greek debt.
Papandreou made the announcement late on Monday in a speech to lawmakers and surprised opposition rivals, who are now very critical and angry of his step saying it was no less than a "constitutional deviation…. that jeopardizes the biggest achievement of Greece which is access to the EU."
Under the Greek constitution, a referendum needs parliamentary approval before it is officially declared by the Greek president. It also requires 40 percent of voter participation to be valid.
There is worry that the referendum will likely be held next year in January which could lead to months of uncertainty for the markets. A confidence vote is due to be held in the Greek Parliament on Friday.