G20 summit: Leaders alarmed over eurozone crisis

 

Jose Manuel Barroso: "This crisis was not originated in Europe"

World leaders meeting at a G20 summit in Mexico have urged Europe to take all necessary measures to overcome the eurozone debt crisis.

They voiced unease over what one top official described as "the single biggest risk for the world economy".

But European Commission President Jose Manuel Barroso said "the challenges are not only European, they are global".

Sunday's victory of a pro-bailout party in the Greek election did not give stock markets the expected boost.

Antonis Samaras, the leader of the New Democracy party, which narrowly won the poll, is holding urgent talks to form a coalition with the socialist Pasok party and possibly the smaller Democratic Left party.

Start Quote

Frankly, we are not coming here to receive lessons in terms of democracy ”

End Quote Jose Manuel Barroso European Commission President

Mr Samaras earlier reiterated that he would "have to make some necessary amendments" to the terms of the bailout agreement reached with the European Union and International Monetary Fund (IMF), "in order to relieve the people of crippling unemployment and huge hardships".

But German Chancellor Angela Merkel appeared to dismiss the idea.

"The new Greek government has to implement the commitments entered into by the country. The programme framework has to be kept," she said.

'Unorthodox practices'

On Monday, many world leaders expressed alarm in Los Cabos at what they saw as a lack of progress in dealing with the eurozone crisis.

World Bank chief Robert Zoellick said: "We are waiting for Europe to tell us what it's going to do."

Meanwhile, Jose Angel Gurria, the Mexican head of the Organisation for Economic Co-operation and Development (OECD), said the crisis was "the single biggest risk for the world economy".

Analysis

The mantra at this G20 summit may be that everyone needs to pull together to avoid a global slowdown, but there is plenty of veiled acrimony.

For those outside the eurozone, the verdict is that the crisis there is alarming and its leaders need to do whatever it takes to end it.

A touch defensively, the President of the European Commission Jose Manuel Barroso said he had not come to G20 to be given lessons. The President of the European Council, Herman Van Rompuy, added that while Europe might have internal weaknesses to correct, other countries had their own imbalances and unfulfilled promises.

This was partly a nod to the new IMF bailout fund. Ahead of this summit, Brazil, Russia, China and Mexico all pointedly failed to commit to their pledges and some of them hinted that Europe could hardly expect them to dig deep into their pockets without a quid pro quo - making good on promised reforms to allot them more voting rights at the IMF's top table.

Pascal Lamy, the head of the World Trade Organization (WTO), warned about the danger of contagion from the eurozone crisis.

He said that global volatility and uncertainty was fuelling a trend towards protectionism, which was not only stalling free trade but starting to reverse it.

Canadian Prime Minister Stephen Harper called on eurozone leaders to make structural changes to solve the debt crisis.

But Mr Barroso mounted a strong defence of the EU's handling of the crisis so far.

Asked by a Canadian journalist to explain why North Americans should "risk their assets to help Europe", he replied: "Frankly, we are not here to receive lessons in terms of democracy or in terms of how to handle the economy.

"This crisis was not originated in Europe... seeing as you mention North America, this crisis originated in North America and much of our financial sector was contaminated by, how can I put it, unorthodox practices, from some sectors of the financial market."

The President of the European Council, Herman Van Rompuy, said a draft G20 communique showed "support and encouragement for the euro area countries and leaders and for the European Union as a whole to overcome this crisis".

Protectionism

The BBC's Andrew Walker says that while Europe is clearly the big danger, there are also problems elsewhere in the world's major advanced and emerging economies, starting with the two largest national economies, the US and China.

The slowdown in India is something else for the G20 to fret about at the Mexican resort of Los Cabos, our correspondent adds.

A draft of the statement to be released on Tuesday is expected to call for a co-ordinated global plan for job creation and growth, reports say.

Start Quote

President Obama's message will be that the financial storm clouds are still hovering, and the risks of yet another global slowdown are all too real”

End Quote

And if growth weakens, the proposed document says, countries without heavy debts should "stand ready to co-ordinate and implement discretionary fiscal actions to support domestic demand", according to Reuters.

In a separate development, China pledged $43bn (£27bn) to the IMF's crisis intervention fund, which has almost doubled to $456bn (£366bn).

The move comes after a meeting of the Brics group of emerging economies - Brazil, Russia, India, China and South Africa. The five nations all offered to contribute $10bn (£6.4bn) to the IMF each in exchange for voting reforms that would give them greater influence in the organisation.

Meanwhile, Russian President Vladimir Putin called for rules to allow protectionism for countries facing a financial crisis.

"It is time to stop pretending and come to an honest agreement on the acceptable level of protectionist measures that governments can take to protect jobs in times of global crisis," he said.

"This is particularly important for Russia as our country will join the WTO this year and we intend to take an active part in the discussions on the future rules for global trade."

BBC diplomatic correspondent Bridget Kendall says that for a forum which has always loudly claimed that free trade is the engine of growth Mr Putin's call is little less than heretical.

US President Barack Obama had earlier talked about the importance of avoiding protectionism, which is the process of making imports more expensive to protect domestic jobs.

G20: How their economies are faring

Country Growth (% GDP change, 2010-11) Unemployment (% 2011) External debt (% GDP, end of 2011)

Source: Principal Global Indicators

Argentina flag

Argentina

8.9

7.5

7.6

Australia flag

Australia

2.2

5.1

86.6

Brazil flag

Brazil

2.7

6

17.2

Canada flag

Canada

2.4

7.5

70.2

China flag

China - mainland

n/a

4.1

n/a

EU flag

European Union*

1.5

10.1**

120.0

French flag

France

1.7

9.3

191.2

Germany flag

Germany

3

6.5

159.4

India flag

India

6.9

n/a

17.2***

Indonesia flag

Indonesia

6.5

6.6

26.5

Italy flag

Italy

0.4

8.4

115.1

Japan flag

Japan

-0.7

4.6

52

Mexico flag

Mexico

3.9

5.2

26.1

Russia flag

Russia

4.3

6.6

27.7

Saudi Arabia flag

Saudi Arabia

6.8

n/a

n/a

South Africa flag

South Africa

3.3

24.9

29.4

South Korea flag

South Korea

3.6

3.4

34.9

Turkey flag

Turkey

8.5

9.8

42.7

UK flag

UK

0.9

8.1

421.9

US flag

US

1.7

9.0

98.2

* Euro area only, ** 2010 figs, *** Q3 2011. Note: External debt refers to debt owed to creditors outside the country. Countries with active financial sectors, such as the UK, tend to have large amounts of external debt.

 

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  • rate this
    +2

    Comment number 593.

    567. Billythefirst Lived and worked in quite a few places. Older now. The PolitBeuro is not run with the same cultural rules that you might expect to see growing up in the U.K.

    Mr Farage is basically right.

    http://www.youtube.com/watch?v=IkT2YC1gim8&feature=fvwrel

    The kids have nothing in Greece, Spain, Portugal, Italy and most of France. It is a disgrace and the devil is on hand.

  • rate this
    +3

    Comment number 592.

    G8, G20 - huh - time wasters!

    It'll take BRIC to sort this mess out.

    Who would have believed it 20 years ago?

  • rate this
    -1

    Comment number 591.

    " David Horton
    Would one of you EUphiles please come and defend this process?"

    You don't get to vote on the head of the UK's Civil Service: the EU Commission fulfills that role. If you want a single market where products and services of one state have unimpeded access to the markets of 26 other states for consumer benefit you need an agreed set of rules and someone to propose and enforce them.

  • rate this
    0

    Comment number 590.

    522. rememberdurruti

    Strange as it may seem the only country to make any sort of economic recovery is Iceland. Why?

    --

    Why? Because their population is about the size of Bradford.

  • rate this
    0

    Comment number 589.

    The only thing politicians can do is spend what they earn - which also means they won't get re-elected.

    So who is conning who? The bankers, the politicians or the voters - they are all looking for get rich quick schemes, where someone else pays the bill.

    However, no one will pick up the tab now and we have to pay our own debts. The quicker we all learn that the better.

  • rate this
    0

    Comment number 588.

    Rather than conducting these summits at 5star beach complexes i would like to see them being held at camp sites. each leader could take rotations on the domestic chores.Obama can do the fry up and Obama can wash up afterwards. Of course Putin would have to be the machismo hunter foraging for the bacon. Being a reality call it would really look like austerity is reaching people at all levels.

  • rate this
    +2

    Comment number 587.

    David Horton @575
    EU Commission
    "undemocratic gravy-train"

    As such, like UK 'establishment', indefensible, of course. And yet we do need 'somehow to find and enforce' shareable rules

    Try looking at the connection between 'gravy' - code for unearned or excessive - and 'democracy'

    Irrespective of realm - county, country, continent, globe - trust will come with secure equality

    We could agree it!

  • rate this
    -1

    Comment number 586.

    48.
    steve
    .. one of the 10 Richest countries in the World
    You obviously didn't read all the ONS figures, or are you trying the old excuse "I don't recall"
    UK
    0.9 GDP
    8.1 Unemployment
    421.9 External debt

    France as an example
    1.7 GDP
    9.3 Unemployment
    191.2 External Debt

    Add private debt just the Banks bailed out by the government
    and the UK is bust! Dream on. A select few are wealthy!

  • rate this
    -1

    Comment number 585.

    319you must be right

    =
    gathering: used no resorces
    agriculture: pesticides & chemicals
    plow: tractors & c/harvesters use oil
    crop rotation: needed to restore the soil
    irrigation: yes, more area in use but can take other's water (war)
    hydroponics: yes, but the fertilizers take a lot of energy

    Hoped for a more specific example, but take your point, but not totaly sold.
    And I've run out of chars!

  • rate this
    +1

    Comment number 584.

    The elephant in the room. Jobs. Bring jobs back to the Western world. There is no other way. this balance needs to be addressed. The west is a massive shopping mall for goods produced elsewhere.

  • rate this
    +1

    Comment number 583.

    #570.Kuldeep
    "Indian PM Mr. Manmohan Singh has got no clue or ideas to pass on to G20 leaders to overcome the current economic stability."

    G20 leaders are not bereft of ideas.They are following plans designed to protect the bodies that support their own positions.

    It is a self-supporting global structure designed to keep plebs down and out, and elite up and in.

  • rate this
    -1

    Comment number 582.

    @561. Gangledorn "Why is the union glag of the UK not drawn correctly in the comparison chart?"
    Because the BBC always does everything it can to belittle the UK, no matter how petty.

  • rate this
    -2

    Comment number 581.

    564.David Horton
    Are Jose Manuel Barroso and Herman Van Rompuy representing us?
    I don't recall asking them.
    /////
    They were asked by the EU heads of state, in our case our PM, whom you can vote for.

  • rate this
    +1

    Comment number 580.

    Jose Manuel Barroso: "This crisis was not originated in Europe"
    Jose Manuel Barroso: "the challenges are not only European, they are global".
    Barroso is getting impatient. The situation reminds me of: "Let he who is without sin, cast the first stone." This goes especially for huge investment banks (US/UK in particular) from which derivative rot originated - in exchange for bailouts.

  • Comment number 579.

    All this user's posts have been removed.Why?

  • rate this
    +1

    Comment number 578.

    #106.Bill Walker wrote:
    "This crisis started in the U.S., not Europe. However, the American system had enough resilience to come through it"

    Or maybe it's just the oil priced in US Dollars.

  • rate this
    -2

    Comment number 577.

    Lord R D-J @545,559
    One World a Riddle?

    Over-complicating. Wonder why?

    Almost all see 'mess'

    Is it 'democratic' mess? Voted for?

    Created by 'representatives'? In what sense?

    Did 'we & / or representatives' make mistakes?

    Explanation, your choice:

    Democratic deficit, or rule by Other?

    Your riddle: 'follow the money, fear, greed, corruption'

    Freedom of conscience needs secure equality

  • rate this
    -3

    Comment number 576.

    24.
    Hastings With a few changes to the time scale to 2 years you could substitute Barosso for Cameron. the difference is one of intelligence. This where Cameron is completely out of his depth with stupid sound bite remarks which reflect what an embarrassing fool he really is.

  • rate this
    +2

    Comment number 575.

    562.Total Mass Retain
    --
    Succinctly put and I haven't heard a better argument for the immediate dismantling of this undemocratic, discredited, gravy train.

    Would one of you EUphiles please come and defend this process? And take it seriously, not the usual 'love-thy-ex-invader', 'all europeans together' rhetoric please.

  • rate this
    -2

    Comment number 574.

    548. Dr Bob Matthews Correct. The wealthy in France do not pay taxes. That is why they are wealthy. London is 5th largest city in terms of a French population. The young and talented go to the U.K. for work. Having been in a senior corporate role I can tell you that the U.K. is meritocratic in general. Not so here.

    The overall frustration is this

    http://www.youtube.com/watch?v=YWSYMpuCFaQ

 

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