Is Greek referendum a grenade in the eurozone crisis?

The Greek prime minister’s decision to call a referendum on the bailout is a surprise to his own country, the eurozone partners and the British. It could also be a bit of a surprise to Mr Papandreou himself. It wasn’t something he would have wanted and wasn’t a plan he shared with eurozone partners last week in Brussels.

It could, of course, go swimmingly well, putting ballast into the bailout and reassuring markets. Papandreou proves that the Greeks have, so to speak, crossed the rubicon and accepted that they must leave their old ways behind them.

But there is another scenario: Greece rejects the deal after an acrimonious campaign in which the whole country does a passable impression of falling apart. All this as the begging bowl is supposed to be passed amongst the Bric nations to help withthe bailout.

(All this assuming that the Pasok government survives the no confidence vote it has said it will submit itself to – the government has 153 of the Greek parliament’s 300 seats).

You get a measure of how completely confident Mr Papandreou is of this referendum tactic when you ponder that he has until now repeatedly denied he was going to do it. This has the whiff of a throw of the dice. Could work – might not.

The FCO was trying to get our ambassador out of a reception to find out what is happening. This a grenade in the eurozone crisis on the eve of a G20 when Europe was hoping to present a reformed and self-disciplined face to the world.