FRENCH AND GERMAN POSITIONS:FRANCE AND Germany pressed Greece to act quickly to stem a new wave of turmoil by holding its referendum early and framing it as a vote on the country's future in the euro.
French prime minister François Fillon, barely concealing his exasperation with Greek counterpart George Papandreou, criticised the “unilateral” decision to hold a plebiscite on the latest bailout.
As an emergency cabinet meetin called by Mr Papandreou unanimously backed his decision to call a referendum, Paris signalled that it wanted him to move quickly and focus the referendum on Greece’s membership of the euro zone rather than specifically asking voters to approve the deal agreed in Brussels last week, which polls suggest is unpopular. “Europe cannot be kept waiting for weeks for the outcome of the referendum,” Mr Fillon said.
“The Greeks must say quickly and without ambiguity whether they choose to keep their place in the euro zone or not.”
Mr Papandreou’s referendum call shocked Greece’s international sponsors, who summoned him to Cannes on the eve of the G20 summit last night to set out his plans. The news caused consternation in markets and seemed to dash hopes that euro zone leaders had managed to buy a period of calm with last week’s deal in Brussels.
In Berlin, German Chancellor Angela Merkel demanded clarity from Greece, warning that its snap referendum had created a “serious situation” in the single-currency bloc. “We have come to a point where we need to know what is coming next. For us, deeds are what count,” she said before departing for Cannes.
“We agreed a programme with Greece last week and, on behalf of Germany and the EU, I can say that we want this programme implemented. For that we need clarity and that is what this evening’s meeting is about.”
In a further signal of the pressure being brought to bear on Mr Papandreou, European Commission president José Manuel Barroso said political stability in Greece was “critically important” if support measures agreed by the EU were to be implemented.
“Without the agreement of Greece to the EU-IMF programme, the conditions for Greek citizens would become much more painful, in particular for the most vulnerable. The consequences would be impossible to foresee,” he said.
Dr Merkel’s spokesman reminded Athens that its European partners had spent the past 18 months showing solidarity with and responsibility for the situation in Greece.
“In the same way there is a responsibility of Greece for its European partners,” said Steffen Seibert. “The government would have preferred had the Greek government informed its partners of its plan.”
Anger over Greece’s failure to flag the idea was shared in Paris.
In the national assembly, Mr Fillon reproached Mr Papandreou for having “negotiated for hours and hours [last week] to reach a deal agreed by unanimity without ever indicating to his partners the possibility of organising a referendum”.
France’s vulnerability to market jitters was underlined again yesterday when the spread between German and French 10-year bonds hit their highest level since the euro was introduced.
Berlin indicated yesterday that the next €8 billion tranche of funding due to be provided to Greece on November 15th may be suspended until after the referendum. “The tranche has not yet been paid, that is the situation today,” said German finance ministry spokesman Martin Kotthaus.
“It remains to be seen how things proceed. According to what we hear from Greece, there’s no urgent need for the payout until mid-December.”
This was echoed by Dutch finance minister Jan Kees de Jager, a powerful figure in the group of euro zone finance ministers, who said the referendum would hinder the release of the €8 billion payment.
The Greek surprise has caused uncertainty in German financial circles, with bankers already appearing to back away from their commitment to accept a loss on Greek investments.
“We should not agree to any done deal before the referendum is through,” said Michael Kemmer, head of the Association of German Banks, though he insisted preparatory work for a debt cancellation should continue.