E.U. Leaders Frustrated By Greek Referendum

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Markets slumped from Asia to Europe to the U.S. on word that the Greek prime minister will put the European Union rescue package to a referendum. What now? Guy Raz speaks with NPR's Eric Westervelt for more.


Financial markets in Europe and the U.S. fell sharply today in large part because of the news out of Greece. The reaction from European leaders was less decisive. Confusion, frustration and some attempts to reassure people that this referendum will not threaten the rescue deal for the entire Eurozone.

For more, we're joined by Eric Westervelt in Berlin. Eric, hi.


RAZ: It seems many European leaders were taken by surprise, complete surprise, by the Greek prime minister's announcement that he was going to call for a referendum. Tell me more about the reaction today from leaders outside Greece.

WESTERVELT: Well, they were taken aback. I mean, a senior official in the Labour Party in the Netherlands said that the referendum would, in his words, be a deal-breaker for last week's plan to save Greece and the Eurozone.

In France tonight, a little stern-sounding Nicolas Sarkozy came out of an urgent Cabinet meeting and said, quote, "France wants to remind Greece that the unanimously adopted plan last Thursday is the only way forward to resolve the debt problem." And he went on to say, essentially, democracy's a nice idea, saying - giving people a chance to express themselves is legitimate. But in his words, solidarity of the whole Eurozone can only be sustained if everyone does what they're supposed to do.

And here in Germany, there was anger and irritation yet again at the Greek moves. A leader of the Free Democrats, the FDP, who are part of Chancellor Merkel's ruling coalition, he said he was annoyed by the Greek announcement. Rainer Bruderle went on to warn about the possibility of a disorderly Greek default. And he told German national radio that the only practical way forward now is, in his words, to build up precautionary measures to protect against Greek bankruptcy. And he went on to suggest that Greece might indeed have to leave the Eurozone and abandon the euro.

RAZ: Eric, just a few days ago, you were in Brussels. You were watching all the smiles and the handshakes after Eurozone leaders essentially hammered out another debt rescue plan. This was the product of long and tough negotiations. So, has all that optimism already faded?

WESTERVELT: I think much of it has. I mean, those officials, Guy, who met, you know, for those two long summits in Brussels, they thought they had really bought themselves some political space and some time, you know, by coming to this broad agreement. Banks would, under this deal, take a loss of 50 percent on Greek debt. There was also an agreement to boost the power and the leveraging power of the rescue fund, among other measures.

You know, now, just a few days later, markets are tanking. Politicians are quarreling. They're pointing fingers. And, you know, we've got predictions of possible doom coming out of some capital. So, it's certainly sparked new tensions, you know, heading into this important G20 meeting in France starting on Thursday.

RAZ: And I understand that this announcement out of Greece has essentially prompted a new set of urgent meetings ahead of that G20 meeting, right?

WESTERVELT: That's right. It may even change, you know, the agenda, in some ways, of the G20. I mean, Chancellor Merkel and President Sarkozy of France, you know, announced they will hold an emergency meeting tomorrow in France, with officials from the International Monetary Fund and from the European Union. They also said they'll meet with Greek representatives to discuss the Greek debt situation. They tried to reassure people today by reiterating, you know, that last week's deal is the only way forward. It was part of an attempt to put a happy face on developments.

Peter Altmeier is the chief whip in the German parliament for Chancellor Merkel's ruling CDU Party said today, the move might even boost the Eurozone rescue operation. Meaning, if, you know, referendum passes, the Greek prime minister would have something of a mandate to go forward. But then he quickly added, we must avoid a long debate on the outcome of this referendum. You know, he was underscoring again, Guy, that the Eurozone simply can't afford, politically and financially, to go back to a period of prolonged uncertainty.

RAZ: That's NPR's Eric Westervelt in Berlin. Eric, thanks so much.

WESTERVELT: Thank you, Guy.

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