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We're following up, today, on the European debt crisis that seemed like it was resolved, however imperfectly, and now seems like it may not be resolved at all.
Just a day before a meeting of the world's top 20 economies in France, Greece stunned the world by announcing it would put a bailout package to the test in a popular referendum, creating a lot of uncertainty about whether it can pass. The president of France, Nicolas Sarkozy, is among those not happy about this. He has summoned the Greek Prime Minister, George Papandreou, to France for talks. Eleanor Beardsley reports.
ELEANOR BEARDSLEY, BYLINE: Europe had hoped to go into Thursday's G20 with a solid and finalized eurozone bailout package - the one agreed upon in an all-night session in Brussels less than a week ago.
As host to the G20, Sarkozy had hoped to be able to move on to broader global concerns about exchange rates and financial regulations. But instead, European leaders seem to be starting from square one once again, dealing with a country that's not even in the G20.
Sarkozy and his eurozone partner, German chancellor Angela Merkel, conferred by telephone yesterday. The French president called an emergency cabinet meeting, then spoke to the press from the steps of the Elysee Palace.
PRESIDENT NICOLAS SARKOZY: (Through translator) This announcement of a referendum surprised all of Europe. France wants to remind Greece that the unanimously adopted plan last Thursday of 17 eurozone members is the only way to resolve Greek debt problems. Giving the people the chance to express themselves is always legitimate, but the solidarity of the whole eurozone can only be sustained if everyone does what they're supposed to do.
BEARDSLEY: Merkel and Sarkozy, who are said to be furious, have summoned Greek Prime Minister Georges Papandreou to Cannes today, for a pre G20 crisis meeting to, as Sarkozy put it, examine the conditions in which the commitments made will be kept. Frederic Delpeche is a commentator at a French cable news network LCI.
FREDERIC DELPECHE: (Through translator) This was a cold shower for Sarkozy, and he has been weakened by it. He thought he would be able to show off this ambitious plan. Now they're trying to pick up the pieces and glue the thing back together in last minute meetings.
BEARDSLEY: But analysts say markets won't wait for another round of negotiations or arm twisting and certainly not for a referendum. European markets opened cautiously Wednesday, after plummeting yesterday on news of the plebiscite. Jim Hertling, with Bloomberg Financial News in Paris, says Greece must be fixed or the damage will likely spread to the next trouble spot.
JIM HERTLING: Even when the markets rallied last week, Italian bonds did not. Everybody is laser focused on Italy. So you've got the immediate Greek problem and then you've got the next exit on the debt crisis highway is Italy.
BEARDSLEY: Some analysts say it may now be just a matter of time before Greece drops the euro as its currency. Rainer Bruederle is leader of the German Free Democratic Party, part of Merkel's governing coalition. Speaking on German radio, he said it seemed as if Papandreou was trying to wriggle out of what was agreed by all EU countries.
RAINER BRUEDERLE: (Through translator) Other countries are making considerable sacrifices for decades of mismanagement and poor leadership in Greece.
BEARDSLEY: But opposition figures in France seemed delighted by news of the referendum, calling it a victory for the people. Desperate to beat Sarkozy in the presidential election next May, they hailed Greek resistance to its European managers. Jean Luc Melenchon leads a coalition of far left parties.
JEAN LUC MELENCHON: (Through translator) They've only been thinking about taking care of the euro and not the Greek people, so they're getting what they paid for, you could say.
BEARDSLEY: The far right also twisted the news to fit its extreme views. Jean Marie Le Pen led the French National Front party for 30 years.
JEAN MARIE LE PEN: (Foreign language spoken)
BEARDSLEY: We've got to organize an orderly exit from the euro, he said, because if we don't, the euro is going to crumble and take all the European economies with it.
Papandreou says he needs the support of the Greek people to continue with the painful austerity plans. Merkel and Sarkozy will likely put pressure on him to hold the referendum as quickly as possible, if he must have it, and end the chaos and uncertainty.
For NPR News, I'm Eleanor Beardsley in Paris.