After emerging from a crisis talks with other European leaders, Greece’s prime minister said the referendum on whether to accept the terms of a European Union bailout was also about whether Greece wanted to remain part of the union.
The AP reports:
George Papandreou told reporters after a meeting with European leaders Wednesday, “I believe it’s crucial that we show the world that we can live up to our obligations.”
“This is not a question only of the program, this is a question of whether we want to remain in the eurozone.”
The comments by Papandreou and other European leaders Wednesday were the boldest public acknowledgement that leaving the common currency zone is an option.
As we reported, Papandreou was summoned by E.U. leaders to Cannes, France after the prime minister decided to put the bailout package up for a vote. The uncertainty that created sent markets reeling on Tuesday.
After the meetings today, the E.U. along with the International Monetary Fund decided that Greece wouldn’t see another installment of its rescue loans until after a vote takes place.
As we wrote earlier, “This is significant, because Greece has said it will run out of money some time this month and the referendum is so far slated for early December.”
Earlier The Guardian framed what would happen in that case like this:
The threat of withholding the country’s long-awaited next aid tranche confirms’ Greeks worst fears (as we reported this morning).
The €8bn cash injection is vital to covering public sector wages, pensions and other payments, officials say. Without it, Athens will run out of money and be forced to declare bankruptcy by November 10th. If true it would be a perfect case of mirror-image brinkmanship on the part of the EU and IMF – a touche to Papandreou’s referendum.
The BBC reports that a Greek exit from the single currency could mean “financial contagion as investors and ordinary bank depositors in other eurozone countries may fear that their own government will follow suit.”