Greek Drama Continues: PM Refuses to Resign, Scraps Referendum

The situation in the eurozone is slightly better than what it was a couple of nights ago. The broad rejection of the the Prime Minister's call for a referendum vote by Greek government officials helped to calm markets and inject some stability into the area.

However, here's the latest development: Greek Prime Minister George Papandreou has come under intense pressure from his own party and opposition lawmakers alike to resign and let a coalition government approve a European bailout plan instead of holding a risky referendum on it.

The instability in Greece has sent immediate ripples throughout Europe. Premier Silvio Berlusconi's government in Italy was teetering as well after it failed to come up with a credible plan to deal with its dangerously high debts, and Portugal demanded more flexible terms for its own bailout.

However, despite the pressure, the PM refuses to resign.

Ignoring increasing calls to step down, the Greek prime minister has rejected pressure to resign, warning that early elections would lead to an exit from the euro, and says instead he is seeking talks with the opposition conservatives.

Perhaps in an effort to stay in his party's good graces, two officials close to Papandreou say he has decided to scrap his plan to hold a referendum on the latest European debt deal for Greece after the main opposition leader said they wouldn't back it.

Papandreou’s Pasok party currently holds a slim majority in parliament, 152 out of 300 seats, and the prime minister has called for a confidence vote on Friday.

The latest turmoil began after Papandreou's own finance minister, Evangelos Venizelos, broke ranks with him Thursday and declared his opposition to a referendum.

"Greece's position within the euro area is a historic conquest of the country that cannot be put in doubt," Venizelos said, adding that it "cannot depend on a referendum."

Antonis Samaras, the leader of the conservative opposition, called for a transitional government to ratify the European debt deal and prepare for early elections.

"Under the weight of these dramatic events, we have witnessed a crisis of the ability to govern. The country must immediately return to a state of normality," Samaras said. "Under the current conditions, the new debt deal is unavoidable and must be safeguarded."

If the Greek government falls, it would mean that every EU nation that had already received a bailout - Greece, Portugal and Ireland - saw their governments fall during the economic turmoil.

"We cannot permanently ride a rollercoaster on Greece; we have to know where things are going, and the Greeks have to tell us where they would like things to go," Jean-Claude Juncker, who chairs eurozone finance ministers' meetings, told Germany's ZDF television Thursday.

The Associated Press contributed to this story.