Even as the leaders of the world's 20 most powerful economies began a two-day summit dominated by Greece's debt crisis, the beleaguered nation's Prime Minister, Mr George Papandreou, scrapped a controversial plan to hold a referendum on the heavily indebted country's membership of Euro zone.
The U-turn by the Prime Minister was announced during an emergency Cabinet meeting, according to senior sources from the governing socialist Pasok party. Mr Papandreou had been told by France and Germany to shape up or ship out of the Euro. On Monday, Mr Papandreou pushed things to the brink by announcing a referendum on the rescue package reached last week. This had led to much chaos in the financial markets. The G20 summit, which had hoped to focus on a whole host of issues including the reforms of the global monetary system and speculative capital flows, is now in disarray.
INDIA'S STAND
Briefing journalists accompanying the Prime Minister for the G-20 summit, the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia, said India has stuck to its stand that any assistance to Greece to help resolve the Euro zone crisis should be routed through the IMF but that it would have no objection if some other country extended bilateral help.
In a statement, the Prime Minister, Dr Manmohan Singh, said that though the Euro zone countries have the main responsibility for dealing with these problems, the dangers from spillovers from the Euro zone to the rest of the world are a matter of concern for all. In an increasingly integrated world, “all of us have a stake in the orderly functioning and prosperity of Europe, including the Euro zone countries. Prolonged uncertainty and instability in the Euro zone countries can hurt us all. The IMF must keep the situation under close watch as part of regional surveillance. It should also be willing to help in an appropriate manner if asked to do so.” Possibly as a result, the customary, formal bilateral meeting between the host Head of Government and Dr Singh was scrapped. Now, Dr Singh is returning ahead of schedule on Friday night, rather than on Saturday morning.
Meanwhile, China has told the French President, Mr Nicolas Sarkozy, that it was up to Europe to solve its problems and that it could not bank on Chinese help.