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G20 Summit begins as Greek debt crisis continues

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European leaders tried pocketbook pressure, saying they would not release a €8 billion in previously approved loans to Greece until the referendum results are in.

(Photo: Associated Press)

Papandreou, too, called the referendum a vote on Greece's future in the eurozone — prompting a rift even within his own party. He faces a parliamentary vote of confidence Friday.

Greek Finance Minister Evangelos Venizelos said "Greece's position within the euro area is a historic conquest of the country that cannot be put in doubt."

Venizelos said it was important for the next bailout installment to be disbursed "without any distractions or delay."

Development Minister Michalis Chrisohoidis issued a statement calling for unity. "There can be no ... return to the drachma and the past," Chrisohoidis said. "We must all assume our responsibilities."

Papandreou's stunning announcement Monday that he would stage a referendum roiled world financial markets and threw into question an ambitious and costly European deal worked out in torturous negotiations a week ago.

Merkel confirmed that Greece did not inform the rest of the eurozone about the referendum. "This did not happen in a coordinated fashion," she said.

It's far from clear whether European leaders have worked out contingency plans for a Greek exit from the eurozone.

In case Greece does leave, "we are considering the issue of how we can ensure that no harm comes to our people in Germany, in Luxembourg, elsewhere in the eurozone," Luxembour Prime Minister Jean-Claude Juncker told Germany's ZDF television Thursday.

"We cannot permanently ride a rollercoaster on Greece; we have to know where things are going, and the Greeks have to tell us where they would like things to go," Juncker said. "I am very decidedly of the opinion that everything must be done so that one euro country does not leave the 17 — but if that were the wish of the Greeks, and I would find that wrong, we cannot force the Greeks."

Sarkozy had hoped the meeting of leaders of the Group of 20 leading world economies, in Cannes on Thursday and Friday, would be Europe's chance to assure the rest of the world that a comprehensive plan to deal with its debt crisis had finally been reached after nearly two years of half-measures and procrastination.

Papandreou's gambit ended that lofty ambition and likely derailed Sarkozy's hopes of transforming a successful summit into a boost to his own re-election chances.

The G-20 leaders are slated to discuss food security, reform of the international monetary system and the volatility of commodity prices — none of which is expected to get much attention or produce any solid conclusions at a summit so dominated by the European quagmire.

Anti-capitalist protesters have not been cowed by the European debt drama, and have staged demonstrations demanding a tax on all financial transactions, an end to tax havens and more aid for development.

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