Europe tells Greece: ‘no more money unless you cancel referendum’
It was a brilliant ploy George. Now its down to who blinks first.
The ultimatum was delivered to George Papandreou by Angela Merkel and Nicolas Sarkozy at crisis talks in Cannes designed to rescue last week’s accord before the G20 summit.
The German Chancellor and French President piled pressure onto the Greek leader amid fears that his shock referendum could torpedo their efforts to underpin the euro. They were backed by politicians from around the world as the G20 looked set to become the third international summit on the eurozone crisis in a week.
However, IMF chief Christine Lagarde claims she has “never seen as much determination and decisiveness to act in a coordinated fashion” as the eurozone leaders are currently showing.
She added: “Of course there are hiccups on the road, sometimes major hiccups, but what matters is what has been agreed on October 26 … and the resilience and the determination of the European partners.”
Just hours before the Cannes talks, the European Financial Stability Facility (EFSF) was forced to pull an auction to raise €3bn of debt because investors felt uncertain about the terms. It was an inauspicious start for the vital bail-out fund, which is supposed to be capable of raising up to €1 trillion.
The Italian cabinet held an emergency meeting in a bid to agree economic reforms that Silvio Berlusconi promised as part of the Brussels deal. As the cost of insuring Italian debt against default remained at record highs of 6.1pc, Giorgio Napolitano, the Italian president, appeared to threaten to bring down the government if the reforms were not agreed. Ignazio Visco, the new head of the Bank of Italy, urged Mr Berlusconi to meet the demands. He said it was “necessary to proceed resolutely” in order to achieve “the lasting reduction of sovereign risk and preserve the stability of the financial system”.
Mr Sarkozy had a “working dinner” in Cannes with President Hu Jintao as part of his on-going efforts to attract Chinese investment in eurozone debt.
Meanwhile, rumours swept the markets that France could lose its AAA credit rating after economic data revealed that the eurozone economies are stagnating.
