ANTANANARIVO Madagascar's President Marc Ravalomanana on Sunday offered a referendum as a possible way out of a political standoff that is jeopardizing the economy of the Indian Ocean island.
Opposition leader Andry Rajoelina has urged Ravalomanana to step down and said on Sunday he has the backing of the army in a crisis in which more than 135 people have been killed this year.
"We must follow democratic principles. If we have to, we will organize a referendum. We are not afraid to do so," the president told some 5,000 cheering supporters outside his palace, in a speech relayed live by local Radio Mada.
He later said the people's choice that was picked in a free election had to be defended. Rajoelina accuses him of turning a blind eye to the high levels of poverty.
There has been no confirmation from the army to back up Rajoelina's assertion he is giving orders to troops.
"Of course it is me who is giving the army orders. I am in permanent contact with them," Rajoelina told Reuters by phone.
"For now we are waiting for him to resign. If he doesn't, then we have other options. I can't say if that means a military intervention," he said.
He expected important developments within the next day or two.
Madagascar's army has remained traditionally neutral during various periods of political volatility since independence from France in 1960. Diplomats are urging it to stay that way.
Colonel Andre Ndriarijaona -- who led a mutiny and ousted the army chief -- told Reuters a plebiscite would take too long to put together.
"A referendum needs time to be organized and the country can not afford to wait under such difficult circumstances. Perhaps it offers a democratic solution, but my worry is the chaos in the meantime," he said.
One analyst said the president's offer was "an astute political move" that is designed to buy time.
"The president is backed into a corner and needs the crisis to dissipate. He could delay the referendum for months and the situation might have changed. So I see it as a delaying tactic," said Edward George of the Economist Intelligence Unit.
Tiebile Drame, a U.N. mediator, told Reuters a solution would come only when all parties involved, including the army, reach a consensus.
"Of course the army should be at the negotiation table. We urge them to participate," Drame told Reuters.
"At the end of this crisis, (Madagascar) will need a government of consensus that should go beyond Ravalomanana and Rajoelina."
Rajoelina, 34, a former disc jockey who was sacked as Antananarivo's mayor earlier this year, says Ravalomanana is an autocrat running the island like a private company.
The president's supporters call Rajoelina a maverick and troublemaker bent on seizing power illegally.
While Rajoelina has tapped into widespread public discontent, especially with high levels of poverty, many inhabitants are fed up with the disruption this year's protests and unrest have brought to their lives and the local economy.
The $390 million-a-year tourism sector is nose-diving, and foreign investors in the important mining and oil exploration sectors are watching events nervously.
Madagascar's capital, a city of faded French grandeur perched on steep slopes, is one of Africa's poorest where many live without electricity or running water and eke out a tough existence on less than $2 a day.