By Max Keiser
Global stock markets have plunged over Greece’s shock announcement that it would hold a referendum on an EU bailout deal. The decision has raised fears that a rejection of the unpopular EU agreement will renew risks of a Greek default and might even force the country to leave the eurozone.
Swords at the ready! Merkel and Sarkozy prepare for their showdown with Greek PM who sparked fresh Euro crisis
- European Commission President calls on Greek leaders to support the bailout package insisting the alternative would be more painful
- Greek cabinet vote unanimously to hold referendum on whether to uphold debt agreement
- Generals face sack in Athens as coup rumours spread
- Papandreou to face confidence vote in Greek parliament on Friday
- White House calls for ‘unanimity of purpose’ at G20 talks
By James White and Rob Cooper
Angela Merkel and Nicolas Sarkozy were tonight due to hold showdown talks with the Greek Prime Minister who sparked a fresh Euro crisis by announcing a referendum on his country’s emergency bail-out.
Ominously for George Papandreou, the French Guard of Honour had their swords at the ready as the German and French leaders arrived at the G20 summit in Cannes today.
However, the only cuts that were going to be discussed were ways of slashing Greece’s massive debts. If Greece rejects the austerity measures in a nationwide poll, Europe faces being plunged into an economic catastrophe.
The Greek PM faces a tough time explaining his extraordinary decision to throw the bail-out plan to his referendum.
He sprung a major surprise on eurozone leaders with the unexpected call for a poll on the bailout measures.
The referendum could take place next month and is expected to ask about the bail-out measures – and not membership of the eurozone.
The pressure was piled on Mr Papandreou tonight as EU and IMF board sources said the Greeks would not receive 8 billion Euros in aid due this month until after the vote because creditors wanted to be sure Athens would stick to its austerity programme.
Ahead of talks tonight, the White House called for a ‘unanimity of purpose’ to come out of the talks.
Spokesman Jay Carney said: ‘Our goal is for there to be a unanimity of purpose coming out of the G20, which is the preeminent forum for these kinds of discussions.’
Merkel and Sarkozy will try and convince world leaders that the eurozone is not in terminal decline.
In Greece yesterday, little was done to calm the nerves of politicians and financial markets as Athens announced extraordinary plans to sack its military leaders amid rampant speculation that it was trying to head off a coup d’etat.
‘It’s all over. The government is about to collapse,’ said one Greek official. Greece’s former deputy finance minister Petros Doukas agreed: ‘The **** has hit the fan.’
Greek ministers this morning voted unanimously for a referendum on the bailout deal to take place in December, backing the proposal made by Prime Minister George Papandreou as he fought to save his own skin.
He now faces a vote of confidence in the Greek parliament on Friday.