CANNES SUMMIT:WORLD LEADERS heaped pressure on Europe to bring the latest wave of turmoil under control as the fallout from Greece's political crisis overshadowed the G20 summit in Cannes.
French president Nicolas Sarkozy said the euro zone crisis was the focus of the day’s discussions between leaders of the world’s largest economies, pushing his ambitious targets for the summit down the agenda.
They discussed increasing the International Monetary Fund’s resources to help distressed states and building a financial firewall to protect vulnerable euro zone economies Italy and Spain from a possible Greek default, according to participants.
Mr Sarkozy said the atmosphere at yesterday’s talks was serious but positive. He described as “interesting” Greek prime minister George Papandreou’s remark that his proposed referendum was not an end in itself and praised Greek opposition leader Antonis Samaras as “courageous and responsible” for endorsing the rescue deal.
“We have said clearly that we want Greece to stay in the euro, but of course the precondition for that is that they wish to do so,” Mr Sarkozy said.
“I don’t want to give the impression that we’re trying to get involved in Greek domestic politics, but if we’re talking about defending the euro zone, the euro and Europe, then that’s our obligation, our duty.”
At yesterday’s plenary sessions, the US and Russia pressed the Europeans to move more swiftly to contain the debt crisis.
“The most important task for us is to resolve the financial crisis here in Europe,” President Barack Obama said as he arrived in Cannes. He said Europe had taken “important steps” towards a comprehensive solution but that it must “flesh out the details” and ensure it was implemented “fully and decisively”.
“Europe should aid itself. The European Union has everything for that today – the political authority, the financial resources and the backing of many countries,” Russian president Dmitry Medvedev said.
Canadian prime minister Stephen Harper said the leaders had discussed contingency plans if Greece were to leave the euro zone, “but my expectation is that cooler heads will prevail and the package will be accepted ”.
During a break in discussions, Mr Sarkozy said the tough message delivered by France and Germany to Greece’s political class in the early hours of yesterday was showing signs of bearing fruit.
Nonetheless, euro area leaders talked openly of a possible Greek exit from the single currency area, seeking to maximise pressure on Athens and preserve the euro in case of a “No” vote.
Chancellor Angela Merkel reiterated that the stability of the euro was a higher priority for Germany than Greece’s euro membership, while euro group president Jean-Claude Juncker said policymakers were working on possible scenarios for a Greek exit.
At a meeting on the sidelines of the summit, euro zone members of the G20 resolved to speed up the implementation of the expanded euro zone bailout fund agreed in Brussels last week.
British chancellor George Osborne said summit participants discussed increasing the IMF’s resources, which China strongly backed, and he had heard no dissent. One idea floated was the creation of a short-term line of credit to help countries facing economic shocks beyond their control.