Cannes, 03/11/2011 (Agence Europe) - At an emergency meeting of European nations at the G20 summit in Cannes, Europe said on Thursday 3 November 2011 that it was determined to protect the stability of the eurozone, with or without Greece. The fate of the Greek Socialist government under Prime Minister George Papandreou was in the balance on Thursday ahead of a vote of confidence at the Greek parliament on Friday. If he loses the vote, the holding of a referendum looks uncertain. If a referendum does take place, the EU warns that the country must be asked whether it wants to remain in the euro and the next aid instalment (€8 billion) will not be forthcoming until further notice.
“The euro is the heart of Europe. Europe is the heart of French politics. We cannot accept the explosion of the eurozone, which would mean the explosion of Europe. Europe is the guarantee of peace on the European continent”, said French President Nicolas Sarkozy, after the first day of talks at the G20 on Thursday 3 November. He said the eurozone must send a “message of credibility” meaning that once taken, decisions must be implemented and the rules must be respected. He drew a clear line in the sand - countries are free to manage their own affairs, but when it comes to the single currency, “our heritage”, then France and Germany, the two biggest eurozone economies, will be in the front line of defending the currency. On Wednesday, Angela Merkel, the German leader, said much the same thing: “We have to have a stable euro and would like to achieve this aim with Greece rather than without Greece. The first job is to protect the euro as a stable currency - that is our duty.”
The French president said that things were progressing in Greece - Antonis Samaras, the leader of the main opposition party, New Democracy, said he would back the sovereign debt management package laid down by the eurozone summit of 27 October (see EUROPE 10483) and the Greek prime minister, George Papandreou, said that the holding of a referendum “was not an end in itself”, and would not be necessary if the opposition backed the 27 October eurozone deal.
“We are determined to implement all the elements of our comprehensive approach to ensure the stability of the euro area”, say the presidents of the European Council, Herman Van Rompuy, and of the European Commission, José Manuel Barroso, in a press release. “The euro area stands ready to continue to support Greece, but Greece needs to stick to the agreed package of 26-27 October and in particular to continue with the implementation of the EU/IMF programme. This needs to be crystal clear. We want Greece to remain in the euro”, they add. They go on to call for “national and political unity in Greece”, given the countries “dramatic political and social situation”.
Leaving Cannes to address the Greek parliament in Athens, the Greek prime minister defended the second Greek bailout plan to fellow Socialist parliamentarians, justifying his decision to announce a referendum by the fact that the decision about whether to remain in the euro should be taken by the people, not the financial markets. In Cannes on Wednesday, he said that the Greeks were “wise” and would be able to make the right decisions in a referendum on Sunday 4 December. Contradictory information was circulating on Thursday about whether Papandreou had resigned or not. The government's slender majority was crumbling fast as we went to press.
On Thursday morning, the Greek finance minsiter, Evangelos Venizelos, issued a statement questioning the wisdom of a referendum: “Greece's position within the euro area is a historic conquest of the country that cannot be put in doubt. This acquis by the Greek people cannot depend on a referendum. Internal political balances and the future of individuals and political parties of this country is not what matters. What matters is to save and recover the country through the only do-able process, a process which is included in the decision of October 26.” He said the only way to protect the country was to immediately apply the 27 October decisions, with a government of national unity. Three Greek ministers, including former EU Commissioner Anna Diamantopoulou, have suggested forming a coalition government with former deputy-head of the ECB, Lucas Papademos, as prime minister, reports AFP, an idea backed by Samaras as long as Papandreou resigns.
Due to speak in public in Cannes on Thursday morning, the president of the European Council, Herman Van Rompuy, and the president of the European Commission, José Manuel Durão Barroso, cancelled their joint press conference, officially because negotiations were continuing in a second emergency meeting of European nations, where Italian Prime Minister Silvio Berlusconi was setting out the austerity measures agreed upon by the Italian government on Wednesday (see separate article).
Agenda turned upside-down. The Greek question turned the G20 summit agenda upside-down and Sarkozy admitted that most of the debate had been over the eurozone debt crisis. US President Barack Obama said on Thursday after talks with Sarkozy that the most important topic on the agenda was Europe's problems. He said he agreed with the French president that the EU had made progress towards an overarching solution to the debt crisis and at the G20, they would be discussing the plan in detail. Obama said they would also be seeing how to solve the situation in Greece. Broadcast live in Cannes, Papandreou's address to the Greek parliament was watched by scores of reporters in the G20 press room.
At the end of October, the 17 eurozone countries agreed on a solution to the sovereign debt crisis that has been raging since May 2010. The solution includes a second Greek bailout programme, boosting the EFSF bailout fund and speeding through recapitalisation of major European banks to the tune of €100 billion in total.
Whether to remain in the eurozone. Angela Merkel said the Greek referendum, if it takes place, must ask whether Greece wants to remain in the eurozone. She said Papandreou's unilateral decision to hold a referendum had changed matters and in order to adjust to the ambiant uncertainty, Europe has decided to speed up the implementation of the 27 October eurozone deal. With this in mind, the finance ministers of Germany, France and Italy held a meeting in Cannes on Thursday with EU Economic and Monetary Affairs Commissioner Olli Rehn to work on the practical details of the 27 October agreement, like how to use leverage to increase the EFSF's lending capacity. This will continue on Monday at a Eurogroup meeting.
Nicolas Sarkozy said France, Germany and the presidents of the European Council, the European Commission and the chair of Eurogroup had reached a “common position” that the solution to the crisis would be “European, coordinated, firm and definitive”, and would be the decisions unanimously agreed to by the seventeen eurozone nations. He said that Europe would support Greece as long as it meets its commitments, but will not pay the sixth instalment of aid to Greece until the country has passed all the measures agreed upon on 27 October and any uncertainty about the holding of a referendum had been lifted. The French President appealed to Greek politicians to reach political consensus. He said they were perfectly entitled to hold a referendum, but if they did, it would have to take place “as soon as possible”. Sunday 4 or Monday 5 December, for example. He said it was clear that the question of Greece's future is on everyone's lips. Does Greece want to remain in the euro? He said it was his firm desire for Greece to remain in the single currency and he would do all he could to make it possible, but the answer to the question lay in the hands of the Greeks themselves. (MB/transl.fl)