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
    0

    Comment number 613.

    Blaming the European sovereign debt crisis on the Financial Crisis of 2008 is analogous to Bernie Madoff blaming hisown losses on it. The credit rating agencies were pilloried for giving toxic mortgage debt triple A ratings but now that they are being honest about the unreliability of Spanish and Greek bonds Barosso throws his toys out of the pram. This man is a liar who takes your money by force

  • rate this
    +2

    Comment number 612.

    The current global financial system has systemic problems, many of which derive from the US Congress and Senate trying to deregulate the financial sector in ways that do not benefit investors, but the corporations that irresponsibly utilize customer money. This has got to change. Greater cooperation and coordination is needed.

  • Comment number 611.

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

  • rate this
    +1

    Comment number 610.

    Ref :
    469.ohgrowup
    2 Hours ago
    OK, I'm no economist...but do I read this correctly?? 422% debt to GDP?? Is that like me owing £422 to someone for every £1 I earn? If so, now I'm really scared! Or is it just me.......

    NO - but it means we owe £4.22p for every £1 we "create / produce" in a year.

    Still very scary indeed - this is what our elitist politicians have done to us.

  • rate this
    +3

    Comment number 609.

    Its simple, there is a deflected blame mechanism so no one actually gets the blame.
    Barroso blames USA,Cameron blames Europe,Obama blames Europe,Merkl/Sarkosy blame UK.
    The more people involved the more clouded things are.
    This happens with the Govt,The Civil Service and the Councils here all of the time.
    There is never accountability, the incompetents prevail and have no clue to the solution

  • rate this
    0

    Comment number 608.

    590. Some Lingering Fog
    JUST NOW
    522. rememberdurruti

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


    Because they get to fish British waters.

  • rate this
    +4

    Comment number 607.

    Increased population, unemployment, homelessness and cost of living for the majority. Increased income and property ownership for the minority who own the banks, avoid taxes, tell the politicians what to do, exploit workers and have no interest whatsoever in people. Sounds like the perfect recipe for a revolution to me. There will only be solutions when people work together for the common good.

  • rate this
    +5

    Comment number 606.

    "David Horton
    Are you that eager to have your leaders imposed on you?
    I pity you."

    I was explaining the respective roles of the EU and the UK at the G20 summit in way where the EU adds value to the UK's positions where it is able and does not undermine it when it can't. If you're so immune to rational debate on the EU as you seem to be, then it's you that has to be pitied.

  • rate this
    +1

    Comment number 605.

    Never mind about the Eurozone antics, am I the only person who reckons that the forthcoming Olympic Games are a crazy waste of money? £9+ billion spent on stadia and a ridiculous piece of twisted steel could have paid for all the U.K. potholes to be repaired and provided far more lasting jobs. It might well have been enough to save other essential public services and REMPLOY.

  • rate this
    +2

    Comment number 604.

    543.
    townboy82 The US works by sleight of hand and printing more worthless dollars to the devalued pile of which China holds a substantial amount. Any time soon, China may well dump their dollars on the market, then you will see the bankers choke. China already has oil contracts in Euros in preference to $US I wonder why?

  • rate this
    0

    Comment number 603.

    Its like groundhog day, round and round we go, leaders watching their navels and rubbing their many chins unable to resolve this mess. Created in Europe because France and Germany rushed ahead with the Euro and then ignored their own entry rules. They should find a way for the PIG economies to leave, recover and then return when they are economically compliant.

  • rate this
    0

    Comment number 602.

    They are quite right to be alarmed thay are not members of the EU fine Wine and Dining Club.
    As non democratically elected officials in the EU they should acknowledge their facile, financial, futility has final finished and they will all be flushed out of the system. stop apying in to this so called elite club and get out and export. (that is if we have anything left to export)

  • rate this
    +2

    Comment number 601.

    "David Horton
    Yeah right. And if all three main parties refuse to let Britons vote on EU membership?"

    If the EU is your greatest worry in life then vote UKIP. If enough people agree with you you'll get your wish. However, most of us have far greater worries in our lives on issues Westminster is supreme: NHS, student fees, policing, pensions, education, defence etc. The EU has no say in these.

  • rate this
    +2

    Comment number 600.

    I've said it a million times & I'll say it again; this crisis belongs to the world & not to Greece, Spain, Italy, Ireland etc. So it has got to be solved on a world basis, with all the world's major banks/governments being involved. If we don't fix the world economy & start soon, then the problem will be unfixable. Also, austerity on it's own is a fools game, it won't work in a world "Depression"!

  • rate this
    -1

    Comment number 599.

    It is possible that Germany insist on even more severe conditions for the bailouts to several countries - Cypress / Italy etc
    if these countries comply fine (Germany continues to benefit from a "weak" currency that enables them to export and afford the bailouts)

    or

    These countries don't comply and Germany then has a "political out" and leaves the Euro themselves. (not their fault)

  • rate this
    0

    Comment number 598.

    Lord R D-J @559

    My posts are for those 'on the lookout' for understanding of 'democracy', and for those 'already there' but interested to share more of Why and How

    If 'riddles' too much for you, we could 'cancel out' common terms, and leave you with the 'final equation', X = Y/N

    Amongst people of goodwill:

    X = acceptable income-share, Y = GNP, N = population

    Do think of 'pros', with 'cons'!

  • rate this
    0

    Comment number 597.

    Staggering that Barroso should point the finger at the US.

    The entirely political and fatally flawed euro project was launched in the real world, not some imaginary world operating to Brussels instruction. It had to be robust enough to survive in that world regardless of bad weather.

    It wasn't.

  • rate this
    +3

    Comment number 596.

    "575 David Horton"

    Be careful what you wish for. Had one T Blair stood for election for EU President he might just have got it. The process you abhor ensured he wasn't seriously considered and got instead a non-entity who dis=dn't threaten anyone's national sovereignty.

  • rate this
    -1

    Comment number 595.

    564.
    David Horton
    13 Minutes ago

    Are Jose Manuel Barroso and Herman Van Rompuy representing us?
    I don't recall asking them.
    A very weak argument! I didn't elect this useless government or its embarrassment of a PM so what explain the validity of your argument if you can?

  • rate this
    -1

    Comment number 594.

    571.Centres for Stuff I Heard from Some Guy
    > Is that OK to you?
    -
    No it flaming well isn't and it shouldn't be OK to anyone who believes in electoral freedom.
    Are you that eager to have your leaders imposed on you?
    I pity you.

    581.The Cosmopolitan
    > in our case our PM, whom you can vote for.
    -
    Yeah right. And if all three main parties refuse to let Britons vote on EU membership?

 

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