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Greece dominates agenda in Cannes

Sarkozy and Merkel have announced a tough stance on Greek hesitations over the euro safeguard plan

GREECE continues to cast a shadow over the G20 summit which officially starts today in Cannes with a working lunch.

President Sarkozy and German chancellor Angela Merkel announced tough decisions after they and other EU chiefs called Greek Prime Minister George Papandreou to an emergency meeting last night in the Riviera town.

The pre-summit talks were aimed at calming the fears for the single currency, and plunging markets, caused by the announcement from Greece that it will hold a referendum on the euro safeguard plan worked out by the European leaders last week.

This comes as Papandreou’s own future is looking uncertain as he faces a vote of confidence in the Greek parliament which – breaking news suggests – he may lose.

Sarkozy said in a statement to the press after the meeting: “We will not allow Europe and the euro to be destroyed”. He added: “Our Greek friends must decide whether they want to continue the journey with us.”

He said key decisions taken included speeding up putting into action the plans worked out last week. A meeting of EU finance ministers is expected today to work on this.

Mr Sarkozy said European leaders are only willing to continue to help Greece if it fulfills its part of the agreements. Another tranche of aid to the country will only be paid if Athens adopts all the measures agreed last week.

He added if a Greek referendum is held it should be done quickly – by December 4 – and should not be on the euro rescue package but on whether or not the Greek people want to stay in the euro at all.

Mr Papandreou has however refused to hold the referendum on the subject of euro membership.

Sarkozy is expected to discuss the problems with American president Barack Obama today, and the issues are expected to dominate this first day of the summit, which was meant to be looking at the bigger picture of the world economy and financial systems.

There is a strong risk that if the referendum takes place as expected it will result in a “no”. A survey for the newspaper To Vima showed only 12.6% of Greeks approved of the plan. However pundits say this would leave the country in economic disaster, and would have knock-on effects for the rest of the Eurozone.

In another twist to the developments the Greek parliament is to hold a vote of confidence on Mr Papandreou on Friday, which, if he loses, could mean he will resign and his referendum plan could be dropped.

This comes as, according to Greek state television channel Net, two MPs for the Socialist majority have said they will not vote in favour of Papandreou – a potential disaster for the prime minister, who has only a tiny majority of 152 MPs out of 300.

The ongoing Greek troubles have come at a bad time for Sarkozy, who was hoping to bring good news to the summit of how the euro had been “saved”, to calm others countries’ concerns. He was also hoping to cement a statesmanlike image six months before the presidential elections next year.

Among other problems, China is understood to be waiting for the uncertainties to be resolved before investing some €100 billion in the European bailout fund.

Credit rating agency Fitch’s said yesterday it is the “viability” of the Eurozone that is at stake.

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