European leaders for the first time raised the prospect of the euro area splintering, forcing debt- stricken Greece to decide whether it’s in or out when it holds a referendum on a bailout package next month.
Led by Germany and France, Europe’s economic and political anchors, the euro’s guardians yesterday cut off financial aid for Greece until an early December vote determines whether it deserves a fresh batch of loans needed to stave off default.
“The referendum will revolve around nothing less than the question: does Greece want to stay in the euro, yes or no?” German Chancellor Angela Merkel told reporters after crisis talks hours before a Group of 20 summit set to begin today in Cannes, France. French President Nicolas Sarkozy said Prime Minister George Papandreou’s government won’t get a “single cent” of assistance if voters reject the plan.
The hardball tactics opened a split in the Athens government and broke with the doctrine that the euro is designed to last forever. European stocks fell and Italian bond yields rose to a euro-era record, as the 17-nation currency hurtled into uncharted territory.
