Prime Minister Papandreou looks very confused about the debt-relief deal with EU.
He suddenly announced that he would hold a referendum for the acceptance of the terms for the debt-relief deal. Because most people predicted that Geek people would deny the referendum, they thought that Papandreou made the deal and the Euro Zone itself danger. His real intent couldn't be understood well, so Euro market was shocked, and Merkel and Sarkozy called Papandreou to Cannes.
At the end he got the agreement of implementation of the terms of the debt-relief deal with the opponent party, New Democracy, by his resignation of the prime minister. I think that this is just as his plan. (see New York Times)
First of all the prior Prime Minister, Kostas Karamanlis, is responsible for this problem. His government made accounting fraud in order to hide huge national debt and pretend to keep Euro Zone limit. And then Papandreou revealed it.
He confronted quite sever political situations. He had to agree with EU about the debt-relief deal. But it meant that his government should do the policies that were quite unpopular among Greece people. And more his government doesn't hold a stable majority in the house and his political position is unstable.
He struggled to a narrow pass. The reason why he proposed the referendum was bluffing. The members of New Democracy also knew that Greek should agree with EU about the debt-deal, but they wanted to impress the responsibility of unpopular policies to Papandreou. I guess that Papandreou knew that he had to resign from the prime minister in order to get cooperation with New Democracy but at the same time the resignation from the prime minister was the last card.
I think that Papandreou did what he could do as a prime minister in such a sever condition. Now the responsibility is handed over Greece people.