Greece goes all in

@CNNMoney November 3, 2011: 9:46 AM ET
Greek Prime Minister George Papandreou is under the gun to win a confidence vote and get the referendum passed.

Greek Prime Minister George Papandreou is under the gun to win a confidence vote and get the referendum passed.

CANNES, France (CNNMoney) -- The referendum in Greece is now a vote to determine whether the nation remains a member of the eurozone.

Assuming Greek Prime Minister George Papandreou passes Friday's vote of confidence, Greece will go ahead with the controversial referendum in December.

"This is a question of whether or not we want to be in the eurozone," said Papandreou. "That is very clear."

Papandreou made the remark following a difficult meeting with French President Nicolas Sarkozy and German Chancellor Angela Merkel ahead of the Group of 20 Summit in Cannes, France.

Merkel and Sarkozy said Greece will not receive the latest installment of its bailout money, which the nation needs to avoid a default, until after the referendum, which could take place as soon as December 4.

Is Greece bluffing?

The referendum concerns the deal that European Union leaders agreed to on October 27, including a second bailout for Greece and a deal with investors to write down Greek government bonds.

The worry is that Greek voters will reject the proposals, which would require the government to enact additional austerity reforms.

Merkel and Sarkozy said repeatedly after the meeting that they they want Greece to be a part of the eurozone.

But they also stressed that Greece cannot remain a member of the currency bloc if the government does not commit to the program outlined last month.

"It's up to the Greeks now to determine whether they want to continue on this road with us or not," said Sarkozy, adding that all European Union members must abide by certain rules.

"If any country wishes to throw out these rules, they are free to do so, but they must leave the eurozone," he said.

Meanwhile, Papandreou said he believes the voters will approve the plan. But he added that the government needs a "wide consensus."

"Greece's position within the euro area is a historic conquest of the country that cannot be put in doubt. The country must feel safe and stable, " said Greek Finance Minister Evangelos Venizelos, upon his return to Athens, following the Cannes meeting. "If we want to protect the country we must ... implement without any delay the decision of October 26 [sic]. Now, as soon as possible."

Early Thursday morning, Papandreou called an emergency cabinet meeting.

Concern about how the referendum would affect the financing of Greece's bailout rattled Wall Street Wednesday.

"As soon as the referendum is completed, and all uncertainty removed, I will make a recommendation to the IMF Executive Board regarding the sixth tranche of our loan to support Greece's economic program," said IMF managing director Christine Lagarde.

Merkel described the talks as "difficult" but she said the discussions were conducted in a "spirit of partnership."

Europe's debt crisis

She said finance ministers from Germany, France and the 17 other members of the eurozone will meet Thursday to discuss ways to accelerate implementation of the latest crisis measures.

In addition to the debt relief and bailout for Greece, EU leaders agreed last month to boost capital requirements for banks and leverage a government-backed rescue fund to prevent the debt crisis from spreading to Italy.

The details of the so-called comprehensive plan were expected to be outlined here as the world's most powerful political leaders gather for talks on the global economy.

But the crisis in Greece has dominated the G20 meeting after Papandreou announced the referendum on Tuesday.

-- CNN's Elinda Labropoulou contributed from Athens To top of page

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