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‘Like G-20 Didn’t Happen’: Greek Crisis Overshadows Summit

November 3, 2011 at 12:00 AM EDT
Under pressure from other countries, Greek Prime Minister George Papandreou scrapped plans to have his citizens vote in a referendum on a new European bailout, but he faces a brewing political crisis. Margret Warner discusses the eurozone's problems with Steven Erlanger of The New York Times at the G-20 summit in Cannes, France.
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MARGARET WARNER: For more, we turn to Steven Erlanger, Paris bureau chief of The New York Times. He’s been following the eurozone crisis closely and is in Cannes for the G20 summit.

And, Steve, welcome back.

This was an incredibly dramatic day. Give us a feel for what it was like in — at this summit. I mean, how high was the tension level as they waited for the Greek drama to play out, and what’s the mood now?

STEVEN ERLANGER, The New York Times: Well, everyone was paying attention to Greece. I mean, everyone else didn’t seem to matter. It was Greece or Italy.

Everyone had their eye on the TV screen, on their iPhones or their BlackBerrys. I mean, it’s like the G20 didn’t happen. You had all these leaders here, and none of them were of any interest even to each other, I think, until they found out what was going on in Greece. It was a very dramatic day because, for many people, it — the fate of the euro and for some people the fate of the European Union hung on what the Greeks decided.

MARGARET WARNER: Tell us more, if you can, speaking of that, about last night’s sort of showdown meeting with Papandreou, with Sarkozy and Merkel.

What were they demanding? I mean, were they basically saying you either abandon this referendum or you’re going to be cut off? Or was it softer than that?

STEVEN ERLANGER: No, it was even harder than that, I think.

They were very angry. And this is the sort of thing that doesn’t often happen among leaders. I mean, it was a very heated conversation. I’m told people were not shouting, but the arguments were very direct. And both Angela Merkel and Nicolas Sarkozy berated Papandreou for putting the whole project at risk, for not consulting his allies and friends, for turning his back within days on an agreement that all 17 countries of the eurozone had hammered out with such difficulty all night long, until 4:30 in the morning in Brussels.

They were very, very angry. And they said, look, you know, Greece has to decide. We won’t meddle in Greece internal affairs, but we want clarity. This uncertainty is destroying our interest rates. It’s making the world unhappy. And Greece has to decide. If you are going to have a referendum, we want it fast. You get no more money until you clear up this uncertainty. Greece has to decide, does it want to stay in the European Union or does it not? And that’s the only question that matters. And if you do, you have to live up to your agreements.

It was a very firm conversation. And it raised the stakes in ways I haven’t heard it raised in quite a long time, I have to say.

MARGARET WARNER: So what are they trying to cook up now today with the IMF, in terms of what the IMF would also do?

STEVEN ERLANGER: Well, the IMF is an integral part of this eurozone rescue plan, which seems to be, I think, back on track. The biggest hole on it is this big bailout fund and who is going to invest in it and how it is going to protect Italy, which after all has nearly two trillion euros worth of debt. Greece has only 350 billion, and after the bank cut 250 billion.

So, the IMF, you know, after all, it’s being run by a former French finance minister. It wants to play a bigger role in Europe, but the Americans don’t really want to go back to Congress and ask for more money for the IMF, which, after all, is designed to help poor countries more than rich ones.

So they have decided to let the IMF grow through voluntary contributions from countries, because other big countries like China, Russia would much rather invest in Europe or help Europe through the agency of the IMF than directly through some other funds.

So I think that’s what is really going on. The French want a more flexible IMF, a larger IMF, an IMF with a little less conditionality, able to more quickly come to the rescue of suddenly troubled countries. But the Europeans also need an agency through which to build up this rescue fund. And the IMF seems to be the agency of choice.

MARGARET WARNER: Now, of course, the American economy is being hugely affected and whipsawed, or certainly the markets are here, by the eurozone crisis.

What is President Obama’s role at this summit? There have been pieces here that he is sort of a bystander or on the sidelines. Or is he engaged and involved?

STEVEN ERLANGER: Well, he’s engaged, but he’s not the center of attention, which is very different for an American president. It’s like being, you know, a very good role actor in a much — in somebody else’s great big drama.

I mean, the Greeks are having trouble. The gods are angry with the Greeks. The Europeans are in a mess. Obama is trying to be supportive, but he’s also saying, listen, you guys have got to strengthen this out, because, frankly, my economy and my re-election are just as dependent on what’s going on as anybody else.

So, Mr. Sarkozy, you have an election coming. You want things to work. Mr. Obama says, fine, we’re there to help, but get your house in order. The global economy needs stability.

MARGARET WARNER: And, of course, this wasn’t what they had planned, all these leaders, for this G20 summit. Has the larger agenda about boosting global growth, has that just been completely overrun here?

STEVEN ERLANGER: Well, it’s been overshadowed.

They are certainly talking about it. The G20 is an odd instrument. I mean, it’s almost too big to make any decisions. There’s really no structure. It’s a great place to talk about things, but it doesn’t have a mechanism for these — all these different countries and agencies to come to decisions. So it’s always a bit of a talking shop.

And I think perhaps we expect a little too much of it. The advantage is, it gets countries of very different kinds all over the world that matter and makes them players in the world economy. But I think to look at it as a decision-making body is probably wrong.

But, you know, frankly, Sarkozy wanted it as the great crowning achievement of his year-long presidency of G20. He wanted it as a springboard for his re-election campaign. It’s a little bit been spoiled by Mr. Papandreou’s gambit, I’m afraid.

MARGARET WARNER: Well, Steven Erlanger of The New York Times, thank you so much for joining us.

STEVEN ERLANGER: Thank you.