There’s word from Cannes, France, that European Union and International Monetary Fund officials are saying that beleaguered Greece won’t be getting its next installment of financial aid — $11 billion — unless Prime Minister George Papandreou somehow convinces other leaders that his country is indeed going to live up to its side of a tough austerity agreement.
If the aid isn’t forthcoming, that could lead to the collapse of the Greek government, a Greek withdrawal from the Euro and the spread of “financial contagion” to other weak economies on the continent, The Guardian says.
The Dow Jones newswire writes that when Papandreou “meets European officials Wednesday evening, he will be told in no uncertain terms that unless Greece provides clarity about its acceptance of the latest European bailout package, no money will be disbursed, according to a European Union official.
Reuters cites EU and IMF sources as saying the “sixth tranche of EU/IMF loans to Greece [are] unlikely to be paid until after Greek referendum is held.”
Tuesday, Papandreou shocked other European leaders and sent financial markets reeling when he announced that the latest bailout package — and its austerity measures — would be put before Greek voters in a referendum. The announcement came as leaders of the so-called G-20 nations (including the U.S.) were preparing for a summit in Cannes that’s scheduled to start Thursday. The agreement is not popular with Greeks.
French President Nicolas Sarkozy and German Chancellor Angela Merkel asked Papandreou to meet with them tonight to explain his decision. Their fear: The delay and uncertainty caused by a referendum could further endanger the Eurozone’s economy.