INTENSE Franco-German pressure was being applied to Greece last night to hold a snap referendum within weeks to end the destabilising uncertainty about its economic future.
Over dinner, ahead of the start of the two-day G20 summit in Cannes, host President Nicolas Sarkozy and German Chancellor Angela Merkel told George Papandreou, the Greek Prime Minister, that a vote needed to take place in December and that it should be a straight in-out question about Greece’s membership of the euro.
Yet last night, Greek Government sources insisted the question would be about the £110 billion EU bailout package and not about the country’s membership of the euro.
Mr Papandreou unexpectedly announced on Monday that the bailout package agreed last week would be decided in a poll.
The Greek PM, who won the support of his Cabinet for his referendum move, appears to be banking on the hope that his fellow citizens’ desire to stay in the euro is greater than their hatred of the additional austerity measures, which they will face as a condition of the second bailout.
However, his high-risk gamble might never take place as tomorrow his Government -- with a two-vote majority -- faces a vote of confidence.
Defeat would mean a general election, yet more uncertainty and the prospect of a Greek default, which would threaten Spain and Italy.
Mr Sarkozy and Mrs Merkel first met the heads of EU institutions and the International Monetary Fund to discuss how to limit the damage from the Greek move and apply pressure for a swift resolution. They are insistent that the eurozone deal of last week cannot be reopened; the money on the table is final.
Indeed, EU and IMF board sources said Greece would not receive an urgently needed £7 billion aid instalment, due this month, until after the referendum because official creditors wanted to be sure Athens would stick to its austerity programme.
Francois Fillon, the French Prime Minister, made clear the Franco-German position, saying: “Europe cannot be kept waiting for weeks for the outcome of the referendum.
“The Greeks must say quickly and without ambiguity whether they choose to keep their place in the eurozone or not.”
Jose Manuel Barroso, the European Commission chief, urged Greeks to unite behind the bailout plan, warning that the alternative would be too horrible to predict.
“Without the agreement of Greece to the EU/IMF programme, the conditions for Greek citizens would become much more painful, in particular for the most vulnerable. The consequences would be impossible to foresee,” he said.
Meanwhile, Silvio Berlusconi, the Italian Prime Minister, called an emergency cabinet meeting to accelerate budget reforms in a bid to calm market turmoil, which threatens to tip Italy’s economy into full-blown crisis.
Italy, in debt to the tune of hundreds of billions of euros which are due to be repaid in the next year, is finding it increasingly difficult to borrow money on the international financial markets.
At Westminster, David Cameron, who arrives on the Cote d’Azur this morning, called for the summit to show a sense of urgency over the implementation of measures to resolve instability in the eurozone.
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