Pre-G20 mini European summit on debt crisis

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French President Nicolas Sarkozy, German Chancellor Angela Merkel and top EU officials met Wednesday for crisis talks on Greek debt in Cannes on the eve of the Group of 20 summit.

IMF director Christine Lagarde, EU President Herman van Rompuy and European Commission chairman Jose Manuel Barroso joined the two leaders for talks on Greece's threat to hold a referendum on an EU bail-out deal.

Greek Prime Minister George Papandreou stunned his EU partners and world markets on Monday when he announced that Greece would put a European bail-out plan agreed the previous week to a referendum.

A reportedly furious Sarkozy summoned Papandreou to Cannes on the eve of the broader summit to try to find a way out of the crisis.

As they arrived, a French G20 source said it was too late to persuade Athens to abandon the plan, but Paris hopes to convince Greece to hold it quickly and to confront voters with a stark choice: whether to leave the eurozone.

"It is too late to persuade them to go back on the decision to hold a referendum," the source said. "The idea is that they hold the referendum as quickly as possible and make it about being in the euro."

Many Greeks are opposed to the rescue package because of the stringent austerity measures attached to it but most favour remaining in the eurozone, according to recent opinion polls.

The referendum has thrown into doubt the eurozone's plan to resolve the crisis through a major write-off of Greek debts, support for banks to absorb their losses and a major boost in the firepower of the EU rescue fund.

© 2011 AFP

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