European leaders' long-delayed admission that a break-up of their cherished common currency was a distinct possibility is overshadowing a two-day meeting of the world's largest and fastest growing economies beginning today in the Cote d'Azur resort.
French President Nicolas Sarkozy will welcome Barack Obama of the US, Hu Jintao of China as well as the leaders of India, Brazil, Russia and the other members of the Group of 20 (G20) leading world economies in the city made famous by its annual film festival, but the event is far from the star turn the unpopular French leader had hoped to make six months before he faces a tough re-election vote.
Sarkozy and other top EU officials have long held that it was unthinkable for Greece to quit the euro because it would be, Sarkozy has said, "a failure of Europe."
But in a late-night press conference with German chancellor Angela Merkel yesterday, the leaders signalled for the first time that Greece's exit from the euro was indeed possible.
Saying that Europe had "done everything we could" to keep Greece in the eurozone, Sarkozy said "now it is up to them to decide if they want to stay in the euro with us."
That shift was prompted by the shock decision of Greek Prime Minister George Papandreou to call a controversial referendum on his country's $130 billion European bailout plan in early December that caught European leaders completely off guard and scrambling for a response.
Papandreou's stunning announcement Monday that he would stage a referendum roiled world financial markets and threw into question an ambitious and costly European deal worked out in torturous negotiations a week ago.
