Greece to Hold Referendum on New European Debt Deal

July 1: Greek Prime Minister George Papandreou, gives a speech during a European Socialist parties conference, in Athens. (AP)

ATHENS, Greece – Greece's Prime Minister George Papandreou on Monday said his troubled country will hold a referendum on a new European debt deal reached last week -- gambling on a hard-bargained agreement that took months to hammer out.

Papandreou appeared to take many lawmakers by surprise with the announcement. 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 held 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 new deal aims to seek 50 percent losses for private holders of Greek bonds and provide the troubled eurozone member with $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 likely to send the country into a fourth year of recession in 2012.