The G20 group of major world economies is meeting in France at a calamitous time for the euro. The eurozone is cracking at the seams, after Greece's shock announcement that it is to hold a referendum on the crucial EU bailout.
The mood in Cannes, as Russia’s President Dmitry Medvedev remarked, is very much like the weather: warm and sunny. But all the participants understand how complicated the background is. The summit was to focus on the broadest range of economical and political issues, but was pretty much hijacked by the deepening currency crisis. This remains the summit's focus especially with the Greek PM’s bombshell to hold a referendum on the new batch of lifesaving measures pushed by Germany and France.
Thursday started with the intrigue whether Greek Prime Minister George Papandreou would offer his resignation during the day. The latest reports suggest the Prime Minister is rather awaiting results of talks with the opposition in order to create a coalition government. Sources in the PM's office say that the Greek referendum will not be called at all if major parties in the country reach political agreement.
On the eve of the G20 emergency talks, PM Papandreou was summoned by euro leaders, the IMF and ECB and told, in essence, that the country needs to play by EU rules – or leave the eurozone. The leaders said that the Prime Minister’s decision to hold a referendum has changed the psychological climate around the euro crisis.
Greek officials, they said, can do whatever they want, but Greece will not receive a bailout until austerity cuts are agreed.
Greece's Finance Minister Evangelos Venizelos issued a written statement today, parting company with Papandreou and saying that Greece's position within the euro “cannot depend on a referendum”.
The Group of Twenty (G20) is a forum of major economy forces discussing key issues in the global economy. The initial meeting of the group, representing some 80 per cent of the world's GDP, was founded in 1999. While most meetings involve finance ministers and central bank governors, heads of state have periodically conferred at summits since 2008. The group includes Argentina, Australia, Canada, the EU, France, Germany, Indonesia, Italy, Japan, Mexico, Saudi Arabia, the Republic of Korea, Turkey, the UK, the USA – as well as Brazil, Russia, India, China and South Africa, which are collectively referred to as BRICS countries.
Following the move, the deputy finance minister, health minister and development minister also spoke out against the plebiscite planned for early December.
The resistance of governing Socialist lawmakers to the referendum plan forced Papandreou to call an emergency cabinet meeting for Thursday.
Recalling Greece’s fame as the birthplace of democracy, some experts have noted the irony in the fuss around the Greeks being allowed to decide their own fate.
“Perish the thought that the people who are victims of these so-called rescue packages that the EU, IMF, and ECB have cooked up for the last 18 months or so… perish the thought that they should actually be allowed to decide whether they want these things,” James Meadway, senior economist at the New Economics Foundation, quipped to RT.
Still some think that no matter the outcome in Cannes, there will be one outcome for Greece.
“I believe that the Greeks will be forced into accepting whatever bailout packages or whatever measures are dropped in their laps by Brussels and the G20,” says author Anthony Wile.
And as European leaders have agreed to a 1-trillion-euro ($1.32 trillion) rescue fund to stop the debt crisis in Greece, they now are looking to China to foot part of the bill.
If China agrees to come to the rescue, however, this will come at a price for Europe, Beijing-based correspondent, Shannon Van Sant told RT.
“It is not in China’s interests to see the eurozone fail or decline,” she said. “China will likely be asking for more major concessions. It is possible that China would demand greater voting power within the IMF for having its money go through the IMF to the eurozone. That of course would diminish the influence of Western powers in that fund. Another thing that China may ask for is greater opportunities for foreign direct investments to Europe.”
Meanwhile, the BRICS countries have already taken the first steps towards resolution of the crisis. President Medevedev said that the leaders of emerging economies have agreed on coming up with a common strategy on the European crisis.
The main solution emerging economies are touting is a complete remodeling of the global financial system and its institutions. People all over the world are already out on the streets, basically demanding the same thing.
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