Heads of state from the world's leading 20 economies are meeting in Cannes Thursday for a two-day summit expected to be dominated by the European debt crisis and Greece's surprise move to put a bailout deal to a popular vote.
In an emergency meeting of European leaders ahead of the G20 summit, French President Nicolas Sarkozy and German Chancellor Angela Merkel said that Greece would not receive “one more cent” of rescue loans from the EU or the IMF unless it abides by the terms of an economic bailout deal reached last week.
Greek Prime Minister George Papandreou shocked Europe by unexpectedly announcing that a referendum would be held on the bailout, which requires Greece to implement further austerity measures that are hugely unpopular with Greek citizens.
Though the wording of the proposed referendum is not clear, Mr. Papandreou said Wednesday that Greece's future participation in Europe's common currency was at stake in the vote.
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President Sarkozy said that he hopes Greece would remain in the eurozone, but stressed that the stability of the euro was of greater importance than rescuing the Greek economy.
Mr. Sarkozy said that he respects the right of Greek citizens to vote on the bailout, but urged Greece to hold the referendum “as soon as possible,” saying Europe cannot be held in a “long period of uncertainty.” Mr. Papandreou says the referendum may be called for December 4 or 5.
The bailout agreement reached last week would provide Greece with an additional $140 billion in rescue loans. It also includes a 50 percent write-off on Greek debt to private European banks.
Before Mr. Papandreou's surprise announcement, the plan had been hailed as a crucial breakthrough in the efforts to solve the two-year-old European sovereign debt crisis.
Greece is not a member of the G20 group of leading and emerging economies, but Mr. Papandreou's referendum plan has become the summit's central issue.
Some analysts fear that the eurozone crisis will overshadow many other issues on the summit's agenda, such as implementing stronger financial regulations and generating sustained growth in the global economy.
