World economic powers confront eurozone debt crisis

The leaders of the world's most powerful economies meet for a G20 summit Thursday to confront a European debt crisis that threatens to plunge the global economy into renewed recession. Under pressure from economic powerhouses China and the United States to put their own house in order, European leaders issued debt-laden Greece with an ultimatum on the eve of the summit taking place in Cannes, France. Summit host President Nicolas Sarkozy and German Chancellor Angela Merkel warned Greece it would not get "one more cent" from the EU and the IMF unless Athens abided by the terms of a rescue deal agreed last week. Without its next eight-billion euro transfer, observers warn, Greece would face problems paying government salaries and a messy debt default within weeks. After talks with Greece's beleaguered Prime Minister George Papandreou, the visibly angry eurozone leaders insisted Wednesday that if he wanted to hold a referendum then he must do so as soon as possible to clear up uncertainty. Papandreou agreed Greece's future in the euro was at stake and said a vote could be called on December 4. He did not reveal the wording of the referendum question, but he said he was sure Greek voters want to stay in the euro. He insisted that it was the "democratic right" of the Greeks to vote on the bailout plan -- which foresees more tight austerity measures -- but added: "I believe that the Greek people want to be in the eurozone." He conceded that a vote put the country's euro membership at stake: "This is a question of whether we want to remain in the eurozone. That's very clear." The G20 leaders, including Hu Jintao of China and Barack Obama of the United States, meet for their first full session of the two-day summit on Thursday, when they will discuss Greece and the eurozone debt crisis. The White House said it wanted "unanimity of purpose" to emerge from the G20 and White House spokesman Jay Carney said the situation would be a key subject. China's Hu told the French daily Le Figaro: "China sincerely wants stability for the eurozone and the euro," but without confirming that China would participate in the EU rescue fund. On Wednesday Merkel and Sarkozy both said they hoped Greece would remain in the eurozone, but warned that Athens would not get a free ride. "The Greeks have to decide whether to continue the adventure with us or not," warned Sarkozy. "We hope to continue with the Greeks, but there are rules that have to be respected." "The Europeans and the IMF can't release the sixth tranche of loans to Greece until Greece endorses the package of October 27," Sarkozy said, calling for the referendum "if one is needed" to be carried out swiftly. The European leaders also pledged to stand by the euro, even if the Greeks were to vote against it. "If the Greeks say they do not want to stay in the euro, we will accept it, but we will not abandon the euro," Merkel said. "We do not want to let the euro be destroyed, we do not want to let Europe be destroyed," stressed Sarkozy. "The Greek people are free to choose, but we are accountable for the stability of the euro zone." On Monday, Papandreou shocked Europe by saying he would put the terms of the bail-out deal to a popular vote, sending panic through markets which thought the rescue plan a done deal. His announcement overshadowed Thursday's G20 summit, which Sarkozy had hoped could be a forum to relaunch a drive to reform global finance. It also increased the threat posed to Italy by its own debt mountain -- forcing the costs of Italian government borrowing higher. International Monetary Fund chief Christine Lagarde said the IMF would only decide on the next tranche of Greek aid after the referendum. Despite hostility in Greece towards the tough rescue conditions, a recent poll indicated that most Greeks favour staying in the eurozone. Following the talks Papandreou set off back to Athens to face a confidence vote in parliament, due Friday. Sarkozy will host the leaders of the world's most powerful economies at a two day summit in Cannes starting Thursday.