The Greeks Should Tell the Germans and the French, "No, No, No!"

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

France and Germany insist referendum must be held within six weeks, as Greeks told that all EU financial aid will be cut off unless they vote 'yes'

INDEPENDENT

France and Germany gave Athens a stark warning last night: we will switch off your financial life-support machine unless Greek voters decide to stay in the euro within six weeks.

The Greek government was reported to be scrambling to accommodate this ultimatum. Sources in Athens said that the planned referendum on the eurozone bailout, which stunned European capitals earlier this week, would now take place in mid-December, not the new year.

The sources also claimed that the referendum question would be phrased in broad or cataclysmic terms. Greeks would not be asked whether they approved the terms of the EU and IMF bailout package negotiated in Brussels last week. They would be asked, Yes or No, whether they wanted to stay in the European Union and the euro. But, adding to the sense of chaos surrounding the latest crisis, that suggestion was contradicted by a government spokesman, Angelos Tolkas, who said: "No, this will not be the issue. It will be the bailout plan." The wording of the referendum question would be crucial to the outcome of the vote: polls indicate that most Greeks are hostile to the terms of the deal but also want to stay in the euro.

It was the eurozone question that the French and German leaders were expected to put to the Greek Prime Minister, George Papandreou, in emergency talks over dinner ahead of the G20 summit in Cannes last night.

French sources said if Greece delays the referendum or if Greeks vote against the terms of the bailout, the EU and the IMF will refuse to hand over the next €8bn (£7bn) instalment of the aid that has been propping up Greek state spending. The effect would be to plunge Greece into default and force it to leave the eurozone.

This is a calamity that President Nicolas Sarkozy and Chancellor Angela Merkel have fought to avoid for almost two years. They now believe that a Greek "train crash" is preferable to a prolonged period of market uncertainty that could increase speculation against Italian and French debt, destroy the euro and plunge the world into a recession.

The French Prime Minister François Fillon told his parliament yesterday: "Europe cannot be kept waiting for weeks for the outcome of the referendum. The Greeks must say quickly and without ambiguity whether they choose to keep their place in the eurozone or not."

French and German officials said that Mr Sarkozy and Ms Merkel would be demanding two things at last night's crisis talks with Mr Papandreou. First, his promise of a referendum, which took the whole of Europe by surprise on Monday night, must be organised by mid-December. Second, the phrasing of the referendum vote must make clear that it is not a matter of improving the terms of the deal, but of defaulting on the national debt. Reports from Athens that Mr Papandreou had been authorised by his cabinet to concede both demands appeared less clear-cut after the spokesman's denial. 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 Greek army chiefs' sacking

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