Greece will receive no bailout money until it decides whether it wants to stay in the eurozone or not, German Chancellor Angela Merkel and French President Nicolas Sarkozy told embattled Greek Prime Minister George Papandreou last night (2 November).

The message was delivered at a joint press conference held by Sarkozy and Merkel following talks held with Papandreou on the margins of the G20 meeting that the French President is hosting in Cannes on 3 and 4 November.

Sarkozy said he had convened the meeting, held together with the heads of the European institutions and of the International Monetary Fund (IMF), in order to "hear" Papandreou.

The Greek prime minister was in fact summoned to Cannes after his surprising announcement that his government had decided to hold a referendum on the hard-fought deal to save his country from bankruptcy at the last eurozone summit in October.

"We are ready to help Greece, because solidarity is at the very base of the European project, as is the principle of loyalty. But this implies that Greece, on its side, fulfills its obligations," Sarkozy said.

Message to the opposition

The French president hammered out that their message was addressed to Greek politicians.  

"We told clearly the Greek authorities, and that includes the majority, but also the opposition in Greece which listens to us, that the Europeans, as well as the IMF, could not envisage the sixth installment of the aid to Greece until Greece has adopted the whole of the package agreed on 27 October, and until all uncertainty related to the result of the referendum have been lifted," Sarkozy said.

He said that in view of the seriousness of the situation, he was issuing together with Merkel "a solemn appeal so that a political consensus is rapidly found in Greece".

Regarding the referendum, he said that the eurozone could not afford to stay for a long time in a period of uncertainty.

A referendum now, not later

"If there should be a referendum, we think it should take place the soonest possible, and we have appreciated the statements of the Greek prime minister indicating a possible referendum around 4-5 December," Sarkozy said.

Only the Greek government can decide when a vote will be held, but Sarkozy insisted that the real issue was Greece's fate as a eurozone member.

"Does Greece want to stay in the eurozone or not? We wish so," Sarkozy said. "We wish so very strongly. And we will make all efforts to make this possible. But it's up to the Greek people to answer this question. And this is the question that they should answer to, if a referendum is organised."

Papandreou, who controls a slim majority of 152 MPs in the 300-seat Parliament, faces a vote of confidence tomorrow. The decision on a referendum is up to the Parliament.

Stability for the euro

Speaking alongside Sarkozy, Merkel stressed that the two leader's first mission was the stability of the euro. "We prefer to reach this objective with Greece rather than without Greece. But the mission to keep the euro as a stable currency is our first duty," she said.

The German chancellor added that Papandreou's decision to hold a referendum had "changed psychologically" the situation since the last EU summit.

She said Papandreou had accepted the approach that the sixth bailout installment be withheld until Greece accepts all decisions taken on 27 October, and until the referendum is decided.

Just as Sarkozy, Merkel said that a political consensus in Greece was expected from Berlin and Paris, adding that Papandreou had pledged to bring the message to the different political forces in his country.

EU stronger after 27 October

Asked if the eurozone was "armed" in case Greece would exit the currency union following a negative result at the referendum, Merkel said: "We are armed. The decisions taken on 27 October are the right ones. The announcement of the referendum has changed the situation; therefore these decisions need to be implemented faster, so that whatever the issue the referendum is, we would be able to find a good decision for the euro."

Sarkozy said that the decision taken was to give a "coordinated, firm and final" European response to implement the decisions, taken unanimously at the 27 October summit.

The French president explained that this implementation would be accelerated and the French and German finance ministers would meet in the eurogroup framework as early as today, together with Economic and Monetary Affairs Commissioner Olli Rehn, to put in place the eurozone's bailout fund of around €1 trillion agreed at the summit.

Challenged by a journalist to explain whether he felt comfortable playing the role of a eurozone directorate with Angela Merkel, Sarkozy said it was "not by pleasure" that he had been performing this task.

"We are accountable for the stability of the euro. The Franco-German axis has become stronger with the crisis," he said.