EuroZone Urged to Take Dramatic Action at G20

From the BBC:

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 that narrowly won the poll, has now begun urgent talks to form a coalition.

Mr Samaras also reiterated that he would seek changes in the terms of a bailout agreement reached with the EU and IMF.

BBC World Service economics correspondent 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.

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-fighting fund.

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 increase their contributions to the IMF in exchange for greater influence in the organisation.

US President Barack Obama and Russian President Vladimir Putin held talks on the sidelines of the summit, urging an immediate end to violence in Syria.

In a joint statement following their first meeting since Mr Putin returned to the presidency, they said they shared a belief that Syrians should determine their own future.

The two countries have been at odds over how to resolve the crisis.

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”.

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.

“Frankly, we are not coming here to receive lessons in terms of democracy or in terms of how to handle the economy,” he told reporters.

He added that he expected G20 leaders to “speak very clearly in favour of the approach the EU is following”.

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