Germany warns Greece over eurozone rescue deal

Photo taken on July 20, 2011 at the Chancellery in Berlin showing German Chancellor Angela Merkel and French President Nicolas Sarkozy
Image caption France and Germany are both determined to implement the plan

The eurozone plan to save Greece from bankruptcy is not up for renegotiation, Germany has warned, ahead of emergency talks with Greece and France.

Chancellor Angela Merkel said Germany would make it clear in talks with the Greek PM that the plan was needed.

French PM Francois Fillon said Greece had to say "without ambiguity" whether it wanted to stay in the eurozone.

Greek PM George Papandreou is to meet French President Nicolas Sarkozy and Mrs Merkel later on Wednesday.

Mr Papandreou announced a referendum on the eurozone rescue plan on Tuesday. Overnight, Greece's cabinet gave unanimous backing to the vote, which could take place in December.

He told an emergency cabinet meeting a referendum would offer "a clear mandate" for austerity measures demanded by eurozone partners.

Earlier, stock markets recorded big drops amid shocked reactions in eurozone capitals to the referendum announcement.

Meanwhile Italy's cabinet will meet at 19:00 GMT to discuss emergency measures to deal with its own debt crisis.

Officials told the Associated Press news agency some measures could be passed by decree ahead of Thursday's G20 summit, while others will have to go through parliament.

'We need clarity'

BBC diplomatic correspondent James Robbins, in Cannes for the G20, says both Germany and France are raising pressure on Greece to drop a referendum on the bailout plan, and ministers in both countries are ramping up calls for Mr Papandreou to change course.

Now China has added its voice to those calling for swift action to protect the rescue plan, he adds.

"We agreed a programme with Greece last week. And from the EU side, at least for Germany, we want to implement this programme," Mrs Merkel said ahead of the talks with Mr Papandreou.

"For this, we need clarity and that's what these talks tonight are about."

Mr Fillon expressed regret about Greece's decision.

"Of course... in a democracy it's always legitimate to turn to the people but we regret... this unilateral announcement on a problem that involves all of Greece's partners," he told the French parliament.

"The Greeks must say quickly and without ambiguity if they want to keep their place in the eurozone or not."

Mr Papandreou is expected to tell the French and German leaders that he had no choice: a referendum was vital to try to overcome resistance on the streets to deepening cuts - and a possible alternative of snap elections would risk Greece defaulting on its debt.

Furthermore, the Greek government faces a crucial confidence vote in parliament on Friday.

One MP from the governing Pasok party has resigned, cutting Mr Papandreou's parliamentary majority to two - and six other leading party members have called on him to resign.

The BBC's Europe editor Gavin Hewitt says that if he loses, elections almost certainly will follow, ushering in a period of uncertainty and instability.

The planned referendum threatens to unravel a deal reached at a EU summit last week aimed at resolving the euro debt crisis.

Leaders agreed on a 100bn-euro loan (£86bn; $140bn) to Athens and a 50% debt write-off.

But in return, Greece must make deep cuts in public spending, slashing pensions and wages and making thousands of civil servants redundant.

There have been widespread protests in Greece against the measures.

On Tuesday, President Sarkozy said Mr Papandreou's decision "surprised all of Europe".

Last week's marathon EU summit was intended to rescue Greece and bring the 17-nation eurozone back from the brink of disaster.

The chairman of the group of eurozone countries, Jean-Claude Juncker, said if a referendum rejected the bailout, it could mean bankruptcy for Greece.

"It will depend on the manner in which the question will be exactly formulated and on what the Greeks exactly vote on," he said.