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
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Solvency II Project Manager - 10 month contract - £800 p/d

£800 per day: Ashdown Group: A highly successful, global financial services co...

SThree: Trainee Recruitment Consulant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250...

Guru Careers: Financial Controller

£45 - £55k DOE: Guru Careers: A Financial Controller is required to join a suc...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£12500 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Day In a Page

Mullah Omar, creator of the Taliban, is dead... for the fourth time

Mullah Omar, creator of the Taliban, is dead... again

I was once told that intelligence services declare their enemies dead to provoke them into popping up their heads and revealing their location, says Robert Fisk
Margaret Attwood on climate change: 'Time is running out for our fragile, Goldilocks planet'

Margaret Attwood on climate change

The author looks back on what she wrote about oil in 2009, and reflects on how the conversation has changed in a mere six years
New Dr Seuss manuscript discovered: What Pet Should I Get? goes on sale this week

New Dr Seuss manuscript discovered

What Pet Should I Get? goes on sale this week
Oculus Rift and the lonely cartoon hedgehog who could become the first ever virtual reality movie star

The cartoon hedgehog leading the way into a whole new reality

Virtual reality is the 'next chapter' of entertainment. Tim Walker gives it a try
Ants have unique ability to switch between individual and collective action, says study

Secrets of ants' teamwork revealed

The insects have an almost unique ability to switch between individual and collective action
Donovan interview: The singer is releasing a greatest hits album to mark his 50th year in folk

Donovan marks his 50th year in folk

The singer tells Nick Duerden about receiving death threats, why the world is 'mentally ill', and how he can write a song about anything, from ecology to crumpets
Let's Race simulator: Ultra-realistic technology recreates thrill of the Formula One circuit

Simulator recreates thrill of F1 circuit

Rory Buckeridge gets behind the wheel and explains how it works
Twitter accused of 'Facebookisation' over plans to overhaul reverse-chronological timeline

Twitter accused of 'Facebookisation'

Facebook exasperates its users by deciding which posts they can and can’t see. So why has Twitter announced plans to do the same?
Jane Birkin asks Hermès to rename bag - but what else could the fashion house call it?

Jane Birkin asks Hermès to rename bag

The star was shocked by a Peta investigation into the exotic skins trade
10 best waterproof mascaras

Whatever the weather: 10 best waterproof mascaras

We found lash-enhancing beauties that won’t budge no matter what you throw at them
Diego Costa biography: Chelsea striker's route to the top - from those who shared his journey

Diego Costa: I go to war. You come with me...

Chelsea's rampaging striker had to fight his way from a poor city in Brazil to life at the top of the Premier League. A new book speaks to those who shared his journey
Ashes 2015: England show the mettle to strike back hard in third Test

England show the mettle to strike back hard in third Test

The biggest problem facing them in Birmingham was the recovery of the zeitgeist that drained so quickly under the weight of Australian runs at Lord's, says Kevin Garside
Women's Open 2015: Charley Hull - 'I know I'm a good golfer but I'm also just a person'

Charley Hull: 'I know I'm a good golfer but I'm also just a person'

British teen keeps her feet on ground ahead of Women's Open
Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

Our choice is years of Tory rule under Corbyn or a return to a Labour government

Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'