LONDON // The Greek prime minister said last week that the Arab Spring was a lesson on democracy for the world.
By asking Greeks to vote on terms of a second rescue package and holding a confidence vote on his own premiership, he risked provoking an unravelling of the euro.
Yesterday, George Papandreou flew to the French Riviera resort of Cannes to explain himself to European leaders who were furious over his surprise referendum on a bailout deal that took them months to work out.
The Group of 20 industrialised nations was due to meet there today and tomorrow.
Mr Papandreou met last night with the German chancellor, Angela Merkel; the French president, Nicolas Sarkozy; the managing director of the International Monetary Fund, Christine Lagarde, and European Union authorities.
Yesterday in Athens, Greek lawmakers began debating a confidence motion that could bring down Mr Papandreou's government.
"We have to get to the point where we know exactly what comes next," Mrs Merkel said as she headed to Cannes.
The French prime minister, Francois Fillon, said the "Greeks must say quickly and without ambiguity whether they choose to keep their place in the euro area or not".
The confusion sowed by Greece risked unravelling an October 27 crisis-fighting strategy and prompted warnings that the country may not receive the next round of international aid it needs to avert default.
"Investors must be forgiven for hoping that the G20 will agree to do something meaningful at a global level to resolve the eurozone crisis," said Andrew Kenningham, an economist at Capital Economics Ltd in London and a former UK Foreign Office official.
"But it looks as if it will do little more than urge eurozone governments to come up with a more convincing solution of its own."
Mr Papandreou, his hold on power eroding after a lawmaker from his socialist Pasok party defected, was betting the referendum would hand him a "clear mandate and strong message within and outside Greece on our European course and our participation in the euro".
His calling of a poll shocked leaders and investors just five days after he signed up for a plan that requires continued austerity at home in return for €130 billion (Dh657bn) in aid and a 50 per cent writedown on Greek debt.
The strategy would also boost the spending power of Europe's €440bn rescue fund to €1 trillion.
"In the European Union, we have agreed on far reaching measures to support Greece," said the European Commission president, José Manuel Barroso, yesterday.
"But for those measures to be implemented it is critically important to have stability in the country."
Mr Papandreou was gambling that the more than 70 per cent of voters who said in an October 28 poll that they wanted Greece to stay in the common currency would outweigh the 44 per cent who deemed the bailout a negative move.
"Democracy is alive and well and Greeks are being called on to rise to a national duty beyond the regular electoral process," he said, calling a parliamentary vote for today and a referendum that would likely happen in January.
"Germany and the entire international community are striving to deal in solidarity and responsibly with Greece, but there is also a responsibility on Greece's part toward its European partners," Mrs Merkel's 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 Luxembourg prime minister, Jean-Claude Juncker, who also heads the group of euro-area finance ministers, said he could exclude the possibility of a default if the Greek people vote against the latest bailout package.
"This is jeopardising all of Europe's attempts to solve the situation in an orderly manner," said Nicola Marinelli, who oversees US$153m at Glendevon King Asset Management in London.
"It could well be that the referendum says 'no' to the bailout and then it is game over for Greece and a disorderly default will come the next day. You would see big losses for Europe's banks and a contagion effect to other countries."
* With reporting by Bloomberg, Reuters and Associated Press
Shadi Ghanim cartoon, page a22
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