Sarkozy scrambles to salvage Cannes summit

French President Nicolas Sarkozy will hold emergency talks Wednesday with European leaders in a last-ditch bid to salvage his Group of 20 meeting of world leaders this week after the shock decision by Greece's prime minister to put his country's financial rescue to a popular vote.

Sarkozy's summit in the sun on the Cote d'Azur now will see the French president end his year as leader of the world's main industrial and developing nations in the reduced position of trying to convince counterparts from the U.S., China, Brazil and elsewhere that Europe hasn't lost the plot when it comes to resolving its two-year old sovereign debt crisis.

Sarkozy will meet with German Chancellor Angela Merkel and top European Union officials as well as the head of the International Monetary Fund Wednesday evening before dinner with Chinese president Hu Jintao. Afterwards, the Europeans will hold another meeting, this time bringing in Greek Prime Minister George Papandreou. Greece is not part of the G-20.

European leaders had been counting on China to use its financial muscle as holder of the world's largest foreign currency reserves to bolster the revamped euro rescue plan that EU leaders thrashed out in difficult all-night negotiations just a week ago.

The Cannes meeting was to be Europe's chance to explain to the world that it had finally taken the tough decisions necessary to bring the debt crisis under control, which has seen three countries, Greece, Portugal and Ireland bailed out and has shown alarming signs of spreading to the much-bigger economies of Italy and Spain.

That's now a hard sell in the wake of Papandreou's unexpected decision Monday to put the plan to a referendum, where approval by Greeks worn out by successive rounds of tax hikes and wage cuts is anything but assured.
Papandreou won the backing of his Cabinet early Wednesday despite anger from abroad, market turmoil across the world and dissent from within his own party.
India's Prime Minister Manmohan Singh left no doubt what world leaders expect of Sarkozy and his European colleagues at the summit.
In a statement released before his departure for Cannes, Singh called Europe's ongoing crisis "the principal source of concern for the global economy."

"It is imperative that the difficult decisions needed to address the economic challenges in Europe and elsewhere are taken swiftly," Singh said.

By GREG KELLER taken from http://news.yahoo.com/sarkozy-scrambles-salvage-cannes-summit-084111489.html