World leaders back Greece
World leaders have backed keeping Greece in the euro zone and vowed to take all steps necessary to combat financial turmoil while revitalising a global economy increasingly threatened by Europe’s debt crisis.
A summit of the G8 leading industrialised nations came down solidly in favour of a push to balance European austerity – an approach long driven by German Chancellor Angela Merkel – with a new dose of United States-style stimulus seen as vital to healing ailing eurozone economies. However, it was clear divisions remained.
‘‘We commit to take all necessary steps to strengthen and reinvigorate our economies and combat financial stresses, recognising that the right measures are not the same for each of us,’’ the leaders said in a joint statement, issued at their meeting at the Camp David presidential retreat in Maryland.
The overarching message from the summit hosted by US President Barack Obama reflected his concerns that the eurozone contagion, which threatens the future of Europe’s 17-country single currency bloc, could hurt the fragile US recovery and his re-election chances in November.
With Greece’s political and economic upheaval high on the summit’s agenda and stoking concerns over instability in Spain and Italy, the Group of Eight leaders sought to calm the situation.
In the first line of their final economic communique, they essentially endorsed calls to broaden Europe’s focus beyond German-backed belt-tightening, calling it ‘‘our imperative’’ to promote growth.
Anxious to quell investor fears, the G8 said yesterday: ‘‘We reaffirm our interest in Greece remaining in the eurozone while respecting its commitments.’’
However, leaders offered no specific prescription for extracting Athens from its worsening crisis.
It was unusual for the often-bland G8 communique to single out a relatively small nation. However, fears a political stalemate in Greece would lead to its departure from Europe’s monetary union at unknown costs to the financial system and global economic stability have spooked markets.
Greek voters this month toppled a government that had agreed to painfully austere terms of an international bailout plan. Uncertainty hangs over the next election set for June 17.
Spain, too, has roiled markets by revealing huge bad loans in its banking system as it struggles to rein in its budget while facing recession.
Merkel, increasingly isolated by a French-led push for a more growth-oriented approach, sought to play down the differences, saying: ‘‘Solid finances and growth belong inseparably together and should not be put into contrast.’’
Obama, who has pressed Europe for more growthboosting measures like those he pursued at home, used his closing statement to remind eurozone leaders that the stakes were high and there could be ‘‘enormous’’ costs if they failed.
‘‘Growth and jobs must be our top priority,’’ he said, reaffirming that Europe has the capacity to meet the challenge.