The summit on the French Riviera had been meant to focus on reforms of the global monetary system and steps to rein in speculative capital flows, but a shock decision by Greek Prime Minister George Papandreou Monday to call a referendum on a new EU/IMF aid package for his country has upended the talks.
Papandreou was summoned to Cannes on the eve of the summit and given a stark warning by French President Nicolas Sarkozy and German Chancellor Angela Merkel, both clearly angered by his gambit, which has sent global stock markets and the euro currency spiraling lower.
They convinced the Greek prime minister to bring forward the referendum to early December and insisted it be focused on the broad issue of whether Greece wants to stay in the currency bloc, rather than limiting it to a vote on a new 130 billion euro ($179 billion) bailout package, which a strong majority of Greeks oppose.
They also made clear that Athens would not receive an 8 billion euro aid tranche it desperately needs to avoid default until the referendum had passed.
Meanwhile Prime Minister Manmohan Singh yesterday arrived at French coastal resort to attend the crucial summit.
While underscoring the need to avoid protectionism, he is expected to advocate the importance of an open, transparent and rules-based multilateral trading system as a driver of global growth.
The economist-turned prime minister, whose advice is often sought at the G20 high table, is expected to give this prescription for providing the necessary confidence to global markets and ensure a more stable global economic environment.
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