CANNES, France — European leaders drew a line in the sand for Greece on Wednesday, saying its referendum on a hard-won bailout deal will decide whether it stays in the eurozone — and vowing Athens will not get new aid until the result is in.
The acknowledgment that the vote — which will likely take place on Dec. 4 — could see Greece leaving the currency union is the first official admission that such an exit is possible and follows almost two years of pledges to the contrary.
The move to tie the vote to the fate of the euro is a huge gamble that could endanger the future of the currency union, the centerpiece of Europe's postwar unity, and potentially push the world economy into another recession.
"The referendum ... in essence is about nothing else but the question, does Greece want to stay in the eurozone, yes or no?" German Chancellor Angela Merkel said at a news conference together with French President Nicolas Sarkozy.
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The leaders of the two biggest eurozone economies spoke to the press after emergency talks with Greek Prime Minister George Papandreou in Cannes, France. The discussion also included International Monetary Fund head Christine Lagarde and other top EU and eurozone officials.
By turning the referendum into a popular vote on whether Greece wants to remain in the eurozone — the currency union that gave it access to the club of Europe's richest countries but also allowed it to pile up a massive debt — leaders are taking a risky bet.
The exit of the eurozone's weakest member could trigger a dangerous domino effect that could quickly see Ireland and Portugal, the other two countries that have received bailouts, also leave the currency bloc and cause the financial collapse of Italy and Spain, which are barely hanging on.
Papandreou said that he was forced to call a referendum after it became clear that there was no "broad support" from opposition parties for a bailout deal reached with the rest of the eurozone and big banks just a week ago.