Europe leaders summon Greek PM to explain himself

George Papandreou was flying to chic French Riviera resort of Cannes on Wednesday to explain himself to European leaders furious over his surprise referendum on a bailout deal that took them months to work out.French president Nicolas Sarkozy, German Chancellor Angela Merkel and top European Union officials arrived at the Palais des Festivals, site of Cannes famous film festival, for private talks ahead of their meeting with Papandreou, scheduled for 19.30 GMT.The pledge to hold a referendum has riled financial markets and threatens to derail a debt crisis plan thats not even a week old. A no vote in the referendum could lead to a disorderly Greek default and force Greece from the euro, toppling fragile banks and sending the global economy spinning back into recession.Even scheduling the vote could scuttle pending payouts of bailout money Greece needs to avoid default. And the wait is ramping up the pressure on Italy, the eurozones third-largest economy, whose debts are enormous but which is considered too big to be bailed out.The fates of some of the G-20 leaders could well hinge on how Papandreous gamble works out, and hence how their own economies fare. For example, French President Nicolas Sarkozy and U.S. President Barack Obama both face potentially tough re-election battles within the year.Sarkozy had hoped that the meeting of leaders from the Group of 20 industrial and developing nations, which runs Thursday and Friday, was going to be Europes opportunity to tell the rest of the world that a comprehensive plan to deal with the debt crisis had finally been reached after nearly two years of half-measures, indecision and procrastination.Papandreous gambit put an end to that lofty ambition.Sarkozy and German Chancellor Angela Merkel summoned Papandreou to the meeting on the Cote dAzur and will continue to insist that the €130 billion ($177 billion) deal thrashed out last week remains the only possible way to sort out Europes Greek problem.Germany and the entire international community are striving to deal in solidarity and responsibly with Greece, but there is also a responsibility on Greeces part toward its European partners, German Chancellor Angela Merkels spokesman, Steffen Seibert, said in Berlin.Countries in Europe particularly the countries in the eurozone are so closely integrated that every serious decision in one capital has effects on the other countries.The head of the global banking lobby that negotiated the debt reduction deal pressured the Greeks to accept the deal.It is important for the Greek people to understand that the hardships of the last 18 months are more likely to moderate with the package than in absence of it, Charles Dallara, managing director of the Institute of International Finance, said in a conference call from Washington D.C.Papandreou meets his peers just hours after winning the support of his Cabinet in a marathon meeting. He has said his hope is that a referendum will lock a restless and disgruntled country into continuing with its reforms that are widely seen as necessary if Greece is to have a sustainable future. Some 20 months of harsh austerity have angered most Greeks, with unions staging a seemingly unending wave of strikes and protest marches many of which have degenerated into riots.EU Commission President Jose Manuel Barroso warned that a failure by Greeks to stick to last weeks agreement would have unknown consequences.Without the agreement of Greece top the EU/IMF program, the conditions for Greek citizens would become much more painful, in particular for the most vulnerable, Barroso said in a statement after arriving in Cannes. The consequences would be impossible to foresee.Papandreou will try to convince his European peers that the referendum is needed. He said it will be a clear mandate, and a clear message within and outside of Greece, about our European course and our participation in the euro.At one stage on Tuesday, following a rebellion among his governing Socialist lawmakers, Papandreous government looked in danger. And hes not out of the woods yet: His government faces a confidence vote on Friday and his Socialists only have a two-seat majority.Irish Finance Minister Michael Noonan said a quick referendum is the only way other than early elections to limit the damage, a sentiment which will be echoed by Sarkozy, according a French official speaking on condition of anonymity.If we had to go through Christmas and the New Year waiting for the Greeks to make a decision, it would make things even more chaotic, Noonan said.Greek Interior Minister Haris Kastanidis said Wednesday that the referendum could be held in December. Already, the uncertainty surrounding the referendum is causing a delay in implementing the euro rescue plan.