BRITAIN ON HOOK IN GREEK BAILOUT; TAXPAYERS COULD HAVE TO GUARANTEE BILLIONS FOR IMF LOANS Cameron Calls on World Leaders to Unite for 'Unprecedented Crisis' Gaping Fault Lines at Summit as China, Russia and India Hold Their Own Talks ?CAMERON PLEA FOR UNITY IN 'GREATEST CRISIS OF OUR TIMES'

The Evening Standard (London, England), November 3, 2011 | Go to article overview

BRITAIN ON HOOK IN GREEK BAILOUT; TAXPAYERS COULD HAVE TO GUARANTEE BILLIONS FOR IMF LOANS Cameron Calls on World Leaders to Unite for 'Unprecedented Crisis' Gaping Fault Lines at Summit as China, Russia and India Hold Their Own Talks ?CAMERON PLEA FOR UNITY IN 'GREATEST CRISIS OF OUR TIMES'


Byline: Joe Murphy Political Editor, in Cannes

DAVID CAMERON today issued an urgent appeal for unity to world leaders as the International Monetary Fund prepared to step in to bail out the stricken eurozone. British taxpayers will be asked to commit billions of pounds if plans go ahead for a major increase in the amount the IMF keeps to lend to struggling countries.

As world leaders gathered for a summit in Cannes, the Prime Minister said Britain is ready to boost its contribution to the IMF. He said: "We face profound difficulties -- unprecedented in our lifetimes -- which have cast a pall over the advanced and emerging economies alike. We can only tackle this crisis by working together, diverse in our experience, united in our action."

The crisis deepened today with the Greek government on the brink of collapse over its prime minister's shock call for a referendum on austerity measures and its membership of the European Union.

The UK guarantees [pounds sterling]29 billion of the IMF's loans war-chest of [pounds sterling]600 billion. Today there were suggestions that the fund could be doubled. It would mean British taxpayers effectively helping to prop up the single currency by providing money for loans to struggling states.

Leaders of the world's 19 most powerful economic nations and the EU are meeting in France to try to find a resolution to the single currency crisis. As US President Barack Obama flew in and insisted he would not help prop up the euro, China's president Hu Jintao was being lobbied to help the stricken economic zone.

As crisis talks were launched to prepare for the possibility of Greece crashing out of the single currency, pressure grew on Greek premier George Papandreou to resign.

He was openly contradicted by his finance minister, Evangelos Venizelos, on the handling of the shock referendum on the bailout plan while an MP in his own governing party branded him "history".

There were doubts that Mr Papandreou could survive a confidence vote tomorrow and rumours that he was even offering to cancel the referendum, due to take place on December 4. Mr Cameron appealed to world leaders to unite in the face of "unprecedented" crisis in the global economy. Gaping fault lines were on display, however, from the start. China, Brazil, India and Russia held their own talks on whether to pump money into the euro stability fund that was promised a week ago.

"China sincerely wants stability for the eurozone and the euro," President Hu assured the French as he went into talks with president Nicolas Sarkozy. However, his deputy finance minister, Zhu Guangyao, said that China could not consider putting up money while the Greek referendum created so much uncertainty.

Talks were also being held by finance officials on how to handle the nightmare situation of Greece defaulting on all of its debts and exiting the single currency. A cash firewall to protect Italy and other vulnerable countries was being mooted.

Treasury officials said British taxpayers' money would not be handed to the eurozone or paid into any fund to bail out the single currency. However, Chancellor George Osborne has deliberately left open the option of supporting the IMF if it gives loans to individual countries, including those in the euro. His officials pointed out that no country has ever lost money that was advanced to the IMF, making the risk of taxpayers losing out low.

Germany and France last night piled pressure on Mr Papandreou by halting [pounds sterling]6.8 billion of bailout money pending the outcome of his referendum. They strong-armed the Greek leader into agreeing that a No vote would mean Greece quitting the euro.

But finance minister Mr Venizelos angrily protested this morning: "This achievement by the Greek people cannot depend on a referendum. …

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BRITAIN ON HOOK IN GREEK BAILOUT; TAXPAYERS COULD HAVE TO GUARANTEE BILLIONS FOR IMF LOANS Cameron Calls on World Leaders to Unite for 'Unprecedented Crisis' Gaping Fault Lines at Summit as China, Russia and India Hold Their Own Talks ?CAMERON PLEA FOR UNITY IN 'GREATEST CRISIS OF OUR TIMES'
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