PM faces ire of Greece?s lenders

Prime Minister George Papandreou arrived at the G-20 meeting in Cannes on Wednesday night for talks with eurozone leaders and officials from the European Union and the International Monetary Fund after prompting panic across Europe by proposing Greece hold a referendum on whether to accept a debt deal agreed last week.

Papandreou was joined by Finance Minister Evangelos Venizelos in late-night talks with the host, French President Nicolas Sarkozy, German Chancellor Angela Merkel, German Finance Minister Wolfgang Schaeuble, European Council President Herman Van Rompuy and International Monetary Fund chief Christine Lagarde.

It was expected that Papandreou would be chided for putting forward the idea of a referendum, which some Europeans fear could scupper last week?s deal and push Greece toward bankruptcy with damaging effects for the rest of the eurozone.

Ahead of the meeting, Lagarde played down the waves caused by Papandreou?s proposal. ?Of course there are hiccups. But what is important is the resilience and determination of the euro partners… to go over the bumps on the road,? she said.

However, the Greek prime minister?s surprise move appears to have put the 8-billion-euro loan installment that Greece was set to receive this month in jeopardy. An IMF source suggested to Reuters that the Fund?s executive board would not approve its share of the tranche because Papandreou could not guarantee that Greece would meets its commitments, which include the continuation of austerity measures and structural reforms.

?If these are now being put in question in December by the referendum, then we have a completely different situation,? a eurozone official told Reuters. A European Commission source told Kathimerini that Brussels would propose delaying the disbursement of the loan even if elections are called instead of a referendum.

Sarkozy?s office announced a fresh round of talks about Greece for this morning, with German, Italian, Spanish, IMF and EU officials. Papandreou was not invited to the meeting.

Sources in Athens said the government aimed to hold the proposed referendum in December, probably on the 4th, 11th or 18th, the sources said. It remained unclear whether the question to be phrased in a referendum will be whether or not Greeks accept the EU debt deal. Rumors swirled that Papandreou would be pressed to change the question to whether or not Greece should remain in the eurozone.

Opposition to Papandreou?s proposal for a referendum continued to fester in the ranks of the ruling Socialist party yesterday, sources said. Already two PASOK MPs, Hara Kefalidou and Eva Kaili, have objected to the move unless it is preceded by the creation of a unity government.

Several ministers are also skeptical. Although a marathon cabinet meeting, which finished in the early hours of Wednesday morning, led to Papandreou securing his ministers? support for his proposal, four ministers — Health Minister Andreas Loverdos, Education Minister Anna Diamantopoulou, Transport Minister Yiannis Ragousis and Agricultural Development Minister Costas Skandalidis — reportedly expressed reservations.