November 5, 2011
“Does Greece want to remain part of the euro zone, yes or no?” That was the blunt, existential question European leaders put to the Greek prime minister, George Papandreou, when they summoned him to an emergency dinner in Cannes on the eve of the G20 summit to explain his unexpected call for a referendum on the latest deal to salvage the euro. And that is the question they wanted the Greek people to vote on in the hope that the answer might be yes. But that referendum may never take place. As The Economist went to press, the prime minister’s position seemed untenable, putting the vote into doubt. Much, it must be said, to the relief of some European leaders.
Greece does not have much time. Nicolas Sarkozy, the French president, said it would not receive “a single cent” until it had cleared up the uncertainty. Barely a week after their “comprehensive” solution to the euro’s crisis, European leaders must openly consider a chaotic Greek default, and its departure from the euro.
Finance ministers are rushing to erect the €1 trillion ($1.4 trillion) firewall that the euro zone had designed at its last summit. But with markets already in panic, it may not be strong enough. Only the European Central Bank (ECB) can put up the “wall of money” that, in the words of Ireland’s finance minister, Michael Noonan, is needed to protect vulnerable but solvent big debtors like Spain and Italy. Senior officials hope the ECB’s new president, Mario Draghi, will “do what is necessary to ensure that we will still have a euro”. But nobody can be sure.
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