Eurozone's ultimatum to Greece: put up or get out

Referendum brought forward after pressure from France and Germany, while Greeks told that bailout will be withheld until after vote on euro membership

Greece last night agreed to hold an early referendum on the Eurozone crisis and to make the vote a simple question of whether Greeks wanted to remain in the euro after France and Germany warned that it would not receive bailout funds without doing so.

The Greek Prime Minister, George Papandreou, who stunned European capitals by announcing the referendum earlier this week, was placed under intense pressure in emergency talks that carried on late into the night on the eve of the G20 summit in Cannes.

He agreed to bring forward the referendum to early next month – 4 or 5 December – and to ask the Greek people to decide on what would amount to a simple "in or out" question.

The German Chancellor, Angela Merkel, said after the talks broke up: "The referendum will revolve around nothing less than the question: does Greece want to stay in the euro, yes or no?" It was agreed that Mr Papandreou could choose the referendum wording himself but that he must not lead the Greek people to believe that they could reject the painful austerity medicine contained in last week's €1 trillion eurozone bailout package and still remain within the euro.

France and Germany had earlier given Athens a stark warning. The EU and IMF would withhold an €8bn payment to Greece due next month unless the referendum was held rapidly, and focused on membership of the euro. This amounted to a threat to turn off Greece's life-support machine and plunge the debt-crippled country into default.

The wording of the referendum question could be crucial. Polls indicate that most Greeks are hostile to the terms of the deal but are anxious to stay in the euro and the European Union.

Chancellor Merkel and President Nicolas Sarkozy warned Mr Papandreou in Cannes last night that other eurozone countries would rather pull the plug on Greece – and shove it out of the euro – than face months of market uncertainty. They said a Greek "train crash" was preferable to a prolonged period of market turmoil that might increase speculation against Italian and French debt, destroy the euro and plunge the world into a recession.

Chancellor Merkel said: "We would rather achieve a stabilisation of the euro with Greece than without Greece, but this goal of stabilising the euro is more important." Speaking at a joint press conference with Ms Merkel, President Sarkozy said: "Our Greek friends must decide whether they want to continue the journey with us."

Mr Papandreou said last night that he was confident that he could win a "yes" vote next month. "The Greek people want us to remain in the eurozone," he said. "We are part of the eurozone and we are proud to be part of the eurozone. Being part of the eurozone means having many rights and also obligations. We can live up to these obligations. I do believe there is a wide consensus among the Greek people and that's why I want the Greek people to speak."

Mr Papandreou did gain some authority earlier yesterday when, after a six-hour meeting that wrapped up at 3am, his Cabinet decided unanimously to back his plans for a referendum, even though its own party has shown scant appetite for the proposal. But it was reported that several ministers voiced their opposition to the decision.

The parliamentary debate in Athens on the confidence motion began yesterday afternoon amid open hostility to the plan from the media and many politicians.

The Conservative opposition leader, Antonis Samaras, said Mr Papandreou had "put the country in the centre of a global storm". On its front page, the left-leaning newspaper Eleftherotypia described the Prime Minister as "the Lord of Chaos".

Mr Papandreou's hopes of prevailing in the confidence vote hang by a thread. With the nominal support of 152 of 300 seats, it would take only a small rebellion to thwart his plans and force elections. The minds of Greek legislators were concentrated by the news that the EU and IMF may hold back €8bn of aid due to be paid to Greece this month.

Brussels believes that Greece has enough funds to struggle on until December. An EU official told Reuters: "The sooner Greece holds the referendum, the sooner the sixth tranche will be paid. But right now, it isn't going to be paid."

Opposition fury over sacking of military chiefs

Greek opposition leaders reacted with outrage yesterday to the sacking of the country's military chiefs, calling it a bid to stack the armed forces with party loyalists before a possible government collapse over Greece's debt crisis.

Late on Tuesday, the socialist government replaced the heads of the army, navy and air force and the leader of the joint chiefs-of-staff. Officials said the move was planned long ago and unrelated to political turmoil. But the main opposition, the conservative New Democracy party, said: "We won't accept this decision."

Greek governments have kept a tight rein on the armed forces since a seven-year military junta collapsed in 1974. Army chiefs are often selected on the basis of their party loyalty. The outgoing military leadership was appointed in August 2009 by the previous conservative administration, just before national elections were called. REUTERS

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine