G20 : Pressure on Greece...[ 2523 ]

Pressure on Greece ahead of G20

 

G20 protesters, these ones wearing masks, are gathering in Cannes

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BBC., 2 November 2011 Last updated at 17:25 GMT

The Greek prime minister faces rising international pressure as crisis talks begin on the eve of the G20 summit.

George Papandreou's surprise decision to call a referendum on the eurozone rescue plan agreed last week has continued to unsettle the markets.
French President Nicolas Sarkozy and German Chancellor Angela Merkel are set to begin talks shortly ahead of a meeting later with Mr Papandreou.
Leaders heading for France urged the eurozone to put its house in order.
The two-day meeting in Cannes of government heads from the Group of 20 major world economies formally begins on Thursday.
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Regret
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German Chancellor Angela Merkel said she wanted "clarity" from Greece.
French President Nicolas Sarkozy said the talks with Mr Papandreou would include discussions on "the conditions under which the engagements undertaken will be kept".
Mr Sarkozy described Greece's "unilateral" decision to hold a referendum as a matter of regret.

Mrs Merkel and Mr Sarkozy were reportedly shocked when Mr Papandreou announced that he would hold a national vote on the bailout.

It is feared that a "no" vote will force Greece into a chaotic exit from the euro, and spread financial contagion.
A condition of extending more financial aid to Greece is further tough and unpopular austerity measures.
Greece's next 8bn tranche of bailout money was approved last week by eurozone leaders, but only for payment in mid-November.
However, the Reuters news agency reported a source on the board of the International Monetary Fund as saying that the payment will be postponed until after the referendum - something that is not expected until January.
The Greek government has previously stated that it would run out of cash before then to fund its spending - which would include payments on its debts.
Meanwhile, there are worries about Italy's commitment to drive though its own austerity plan. The country's cabinet is holding an emergency meeting on Wednesday evening to discuss budget measures.
Italy, which has hundreds of billions of euros in debts coming due for repayment over the next 12 months, is finding it increasingly difficult to reborrow the money in international financial markets.

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The country's one-year cost of borrowing has risen to 5.1%, its highest since joining the euro, and far above the mere 0.3% interest rate that Germany must pay.

'Fundamental question' The deal agreed with Athens last week is a key part of a wider strategy to increase Europe's financial rescue fund and bolster banks.
Eurozone leaders, already facing international pressure to resolve the crisis, had hoped to present a definitive action plan at the two-day G20 meeting in Cannes of the world's largest economies.
But there is now concern that the action plan may unravel.
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France's European Affairs Minister Jean Leonetti said there was no question of the eurozone renegotiating Greece's bailout package.
"The decisions that were made [last week] cannot be renegotiated. They are a package that is the only way for Greece to emerge from the unsustainable debt that it has to bear," he said.
"The referendum raises a fundamental question: do you or do you not want to remain in the eurozone. Because if you do not accept the accord then that means not staying," Mr Leonetti said.
Germany said on Wednesday that it was still an open question whether the next 8bn euros (£6.9bn) of emergency aid for Greece could be paid out before a referendum.
"The tranche has not yet been paid. That is the situation today. How things proceed is yet to be seen," said German Finance Minister Martin Kotthaus.

But concern about the situation has spread beyond Europe.

Speaking before he travels to France, Indian Prime Minister Manmohan Singh said "much more needs to be done" to restore investor confidence in the eurozone.
'Political embarrassment' That sentiment was echoed by US President Barack Obama's spokesman, Jay Carney.
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Crisis jargon buster

G20

The G8 plus developing countries that play an important role in the global economy, such as China, India, Brazil and Saudi Arabia. It gained in significance after leaders agreed how to tackle the 2008-09 financial crisis and recession at G20 gatherings.

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He said: "[The Europeans] need to implement the very important decisions they made last week to provide a conclusive resolution to it."

China's official Xinhua news agency called on EU leaders to persuade Greece to "drop the referendum idea" or help them find a "better solution to their political embarrassment".
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Also due to join the Greek, German and French leaders on Wednesday evening are European Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso, Eurogroup President Jean-Claude Juncker, and International Monetary Fund Managing Director Christine Lagarde.
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It was unclear if Mr Papandreou will still be joined at the meeting by his finance minister Evangelos Venizelos, who was discharged from hospital earlier after complaining of stomach pains on Tuesday.
Last week, eurozone leaders agreed a 50% debt write-off for Greece as well as strengthening the eurozone bailout fund, the European Financial Stability Facility (EFSF), to 1trn euros ($1.4tn; £860bn).
However, the package is reliant upon Greece continuing to carry out further austerity measures.
Most commentators say this will be rejected by the Greek people in any referendum, which may not be held for many weeks.
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The confusion over Greece's position is a blow for eurozone officials who have been courting China, India and other emerging market nations to invest in the EFSF.
China, with its $3.2tn in foreign exchange reserves, is seen as the only developing economy with sufficient resources to make a sizeable contribution.