Britain’s Prime Minister David Cameron called Wednesday for tomorrow’s G20 summit to show a sense of “urgency” over the implementation of measures to resolve instability in the eurozone.
The gathering in the French Riviera resort of Cannes is set to be dominated by the chaos unleashed by Greek Prime Minister George Papandreou’s announcement on Monday of a referendum on the eurozone rescue package for his country’s ailing economy.
Papandreou, who is coming under intense pressure to reverse his decision, is facing crisis talks this evening with French president Nicolas Sarkozy and German chancellor Angela Merkel in Cannes.
Global markets were panicked into steep falls yesterday by his shock announcement, which threw into doubt the package agreed at an emergency meeting of the 17 eurozone states only last week. Greek sources said today the national poll – approved by Papandreou’s Cabinet last night – could be held as early as next month.
But the Greek prime minister must first survive a no-confidence motion in the Athens parliament on Friday as well as calls from some of his own party for him to quit.
European leaders had been hoping for a period of calm in which to finalise the details of last week’s deal, which envisages banks taking a 50 percent “haircut” on Greek debts while the eurozone bailout fund is boosted to one trillion euro (870 billion pounds).
They now face weeks of uncertainty and potential market instability until it becomes clear whether the Greek electorate will back the plan – or indeed whether Greece can remain a member of the euro.
Cameron, who arrives in Cannes tomorrow morning, has made clear that Britain will not contribute to any eurozone bailout fund for Greece or any IMF package specifically designed to shore up the single currency area.
At Prime Minister’s Questions in the House of Commons today, former Labour chancellor Alistair Darling urged Cameron to use the G20 gathering to persuade the leaders of the world’s biggest economies of the need for urgency in filling in the detail in the eurozone plan.
“It is not at all clear how on earth Greece is going to get out of its deficit even if the referendum passes,” said Darling, who was chancellor when the G20 met in London in 2009 to agree a global rescue deal in the wake of the financial crisis.
“European banks will need shoring up well before next summer and as for the new rescue fund, which may be needed sooner than we think, it doesn’t actually exist. Will you not accept that G20 now needs to show the same urgency and sense of purpose that it showed two years ago when it met in London, otherwise instead of being ahead of events, governments are going to be condemned to be dragged along in their wake.”
Cameron told MPs that Darling was “right about the urgency of the G20 meeting and the necessity of its agenda”.
And he added: “I think some progress was made at the European Council meeting a week ago when, for the first time, they did accept a proper write-down of Greece’s debt, which has to be part of the solution.”
“We need also a proper recapitalisation of Europe’s banks, done to a credible test rather than the incredible tests that were there in months gone by, and the final element – which needs to have more detail added and more substance added – to make sure there is a proper firewall to stop contagion in the eurozone.”
“It has become even more urgent to put meat on the bones of this plan to show that we’re removing one of the key obstacles to global growth, which is the failure to agree a proper plan to deal with problems in the eurozone.”