Or rather, drops euro referendum plan1 but the effect is much the same.
When the referendum was announced a few days ago, some thought he had played a blindingly good political hand. Which just goes to show that economists aren’t so great at politics and the cobbler should stick to his last. Which is why I’m commenting, obviously. But the argument – that he had magically got out of a difficult position (the Greek public didn’t like the deal that was struck, this was he evaded responsibility, and maybe the need to buy off the public might result in a better deal) sounded quite plausible to me. The downsides were that the rest of Europe wasn’t going to like it, and also that while it might have been good politics it wasn’t clearly good economics.
And that seems to be what the Greek political class has decided:
George Papandreou opened emergency talks with his opponents, who performed a U-turn and agreed to broad austerity measures in exchange for a European bailout.
Faced with the deal falling apart the opposition seem to have been forced to abandon their opposition and agree that yes, they really think the deal is the best solution after all. Which at this point looks good: politicians forced to abandon posturing and consider the good of their country for fear of what their ignorant public might decide if left to themselves.
1. That link is broken, viewed from the perspective of 2015. I think it was http://www.independent.co.uk/news/world/europe/greek-pm-drops-euro-referendum-plan-6256482.html.