Prime Minister George Papandreou's decision to hold a confidence vote on Friday and then a referendum on the debt deal stunned investors, angered EU leaders and left the eurozone back at square one, with Italy now under pressure just ahead of a high-profile Group of 20 summit in France.
The turmoil saw some European markets slump by 5.0 per cent or more and pushed borrowing rates uncomfortably near record levels for Italy, which can ill afford to pay extra to raise funding given its strained finances.
French President Nicolas Sarkozy called Greece to order, insisting, in concert with Germany, that last week's accord was the only way to solve its debt problems. Noting that the referendum call "surprised all of Europe," Sarkozy said "France reminds everyone that the accord adopted ... unanimously by the 17 member states ... is the sole possible way to resolve Greece's debt problems. "Giving people a voice is always legitimate but the solidarity of all the eurozone countries is not possible unless each one agrees to measures deemed necessary," Sarkozy said.
France and Germany, he added, took the initiative to hold a meeting Thursday before the opening of the G20 summit in Cannes, of all European institutions, the International Monetary Fund and the Greek prime minister to discuss "the conditions under which the engagements undertaken will be kept."