Open

Coming up

Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

A thin line between fact-checking and propaganda in Gaza social media coverage

Read more

DEBATE

Gaza: How to Stop the Spiral? Israel Readies For Ground Offensive (part 2)

Read more

DEBATE

Gaza: How to Stop the Spiral? Israel Readies For Ground Offensive

Read more

FOCUS

Ireland's missing babies casting light on a dark history...

Read more

WEB NEWS

World Cup 2014: Germany-Brazil inspires the Web

Read more

THE INTERVIEW

Boutros-Ghali: 'I wanted to reform the UN'

Read more

IN THE PAPERS

57 000 little problems

Read more

IN THE PAPERS

The Sarkozy 'threat'

Read more

BUSINESS DAILY

Budget challenge for India's new government

Read more

  • Hamas rockets reaching deeper into Israel

    Read more

  • French companies will have to accept anonymous CVs

    Read more

  • Ukrainian forces close in on Donetsk

    Read more

  • Germany asks US intelligence station chief to leave country

    Read more

  • Death toll rises in Gaza as militants target Israeli cities

    Read more

  • UN chief Ban Ki-moon appoints new Syria mediator

    Read more

  • Video: Muslims in China confront obstacles to Ramadan fasting

    Read more

  • Tour de France passes WWI Chemin des Dames battlefield

    Read more

  • Senegalese man awarded French visa in gay marriage debate

    Read more

  • Israel steps up airstrikes as diplomacy gets under way

    Read more

  • Argentina beat Netherlands on penalties to reach World Cup final

    Read more

  • Foiled French jihadist ‘targeted Louvre and Eiffel Tower’

    Read more

  • Obama in Texas to urge congressional action on child migrant crisis

    Read more

  • Iraq’s heritage 'in danger' from ISIS militants

    Read more

  • 100 years on, the Tour de France returns to the Western Front

    Read more

Europe

G20 leaders urge Europe to settle its own problems

©

Text by News Wires

Latest update : 2011-11-04

As the curtain closed on the G20 summit in southern France, world leaders offered verbal support but balked at contributing new money to save the debt-burdened eurozone, while French President Sarkozy urged EU members to scale up the IMF's funds.

REUTERS - The euro zone won verbal support but no new money at a G20 summit on Friday for its tortured efforts to overcome a sovereign debt crisis, while Italy was effectively placed under IMF supervision.

Leaders of the world’s major economies, meeting on the French Riviera, told Europe to sort out its own problems and deferred until next year any move to provide more crisis-fighting resources to the International Monetary Fund.

“There are hardly any countries here which said they were ready to go along with the EFSF (euro zone rescue fund),” German Chancellor Angela Merkel told a news conference.

Potential sovereign investors such as China and Brazil wanted to see more detail before they made any firm commitment to put money into the bailout fund.

Global stocks and the euro fell as doubts resurfaced about Europe’s financial rescue package.

U.S. President Barack Obama joked he had learned a lot in two days about the complexity of the EU’s “laborious” decision-making process but said he was confident Europe had the capacity and the right plan to meet the challenge. The key was now rapid implementation.

“They’re going to have a strong partner in us, but European leaders understand that what is ultimately important is to have a strong signal from Europe that they are standing behind the euro,” he told a news conference.

But Australian Prime Minister Julia Gillard summed up the mood of many summit participants when she said: “Europe needs to get its own house in order.”

The two-day summit began under the shock of Greece’s since withdrawn plan to hold a referendum that could have catapulted it out of the 17-nation currency zone, and ended with Italy being pressed to restore its credibility on financial markets.

Prime Minister Silvio Berlusconi, his government hanging by a thread, said Italy would welcome quarterly IMF monitoring of long delayed pension and labour market reforms and privatisations he has promised to implement now.

French President Nicolas Sarkozy, who chaired a summit hijacked by the euro crisis, said Berlusconi had volunteered to accept the extra scrutiny because he was “aware of market doubts over the implementation of the plan”.

Given the size of its economy, Italy poses a far graver risk to the 17-nation currency zone than Greece, which almost brought the euro to its knees by mismanaging its public finances.

With its borrowing costs rising and debt levels stuck at 120 percent of GDP, Rome has the third largest economy in the euro area with the biggest government bond market, and is too big to fail. Yet paralysis in Berlusconi’s faction-ridden government has sapped investor confidence.

Ultimatum

The Italian leader said the IMF had offered to lend Italy money but he had refused.

His concession on monitoring came after a European ultimatum forced Greece to step back from its referendum and agree instead to seek national consensus to drive through austerity measures.

“I see this as evidence of how important Italy’s reform process is for the country and for the euro zone as a whole,” European Commission President Jose Manuel Barroso said.

The Commission will also monitor Italy, conducting a first assessment next week. But the IMF’s new role takes the euro zone crisis to a new level and suggests markets no longer trust the EU to police its own economies.

To varying degrees bailout recipients Greece, Portugal, Ireland and now Italy are relinquishing sole control of their economic policy.

The leaders of France, Germany, Italy, Spain, the European Central Bank, the IMF and European Union institutions discussed with Obama ways of boosting the IMF’s warchest to help prevent fallout from Europe plunging the world economy back into recession.

No figures were agreed on the IMF but the boost to resources, mostly from large emerging countries such as China, could be in the range of $300-350 billion, G20 officials said.

Sarkozy said G20 finance ministers were instructed to take forward several options for scaling up the Fund’s resources when they meet next February.

“We will ensure the IMF continues to have resources to play its systemic role to the benefit of its whole membership,” the final G20 communique said.

One idea discussed in Cannes would entail pooling euro zone countries’ rights to borrow from the IMF to build a fighting fund to support vulnerable sovereigns such as Italy and Spain. This could make available another $280-300 billion, a G20 source said. But no decision was taken.

Beyond Greek drama

Delegates gathered in the building that hosts the annual Cannes film festival found themselves watching the euro zone battle to snuff out its biggest fire yet as Greece seemed on the brink of quitting the euro.

Greece’s future in the euro zone may hinge on a vote of confidence in Socialist Prime Minister George Papandreou late on Friday night.

If he wins, government sources say he has pledged to step aside and make way for an interim national unity government that would enact the EU/IMF bailout plan, receive a vital aid instalment and pave the way for early elections next year.

However, if he loses, Greece will be plunged into deeper political turmoil and may face a hard default and possible exit from the 17-nation single currency area.

The Greek drama wiped out Sarkozy’s hopes of a breakthrough on big early goals such as rethinking the global monetary system. But the summit did call for a more rapid move to market determined exchange rates, explicitly mentioning China for the first time in that context.

“The crisis in Europe is causing a global systemic crisis including Asia. Rather than creating a new global framework, everyone is expecting the IMF to become more proactive,” Japanese Finance Minister Jun Azumi said.

“The focus of debate is how to set up a firewall but we consider that the IMF should become one big wall.”

Date created : 2011-11-04

  • G20 SUMMIT

    Sarkozy reiterates call for financial transactions tax

    Read more

  • G20 CANNES SUMMIT

    G20 leaders struggle to overcome euro crisis

    Read more

  • G20 CANNES SUMMIT

    EU leaders warn Greece ahead of G20 summit

    Read more

Comments

COMMENT(S)