Euro crisis top of G8 agenda

WORLD leaders backed keeping Greece in the euro zone yesterday 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 dose of Us-style stimulus seen as vital to healing ailing euro-zone economies.

“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,” leaders said in a bold statement issued at their meeting at the Camp David presidential retreat in Maryland.

The message sent by the summit hosted by US President Barack Obama reflected his own concerns that the euro-zone contagion, which threatens the future of Europe’s 17-country single currency bloc, could hurt the fragile US recovery and his own reelection chances in November.

In their final economic communique, the Group of Eight leaders welcomed discussions in Europe to broaden the focus to more progrowth remedies and said: “We reaffirm our interest in Greece remaining in the euro zone while respecting its commitments.”

It was unusual for the oftenbland G8 communique to single out a relatively small nation. But fears that 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.

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.

“It is significant that a group as weighty as the G8 backs Greece and reinforces the idea that Europe needs a strong union. It strengthens its hand,” said Marc Chandler, a currency strategist at Brown Brothers Harriman.

In another move to shore up shaky global growth, the G8 leaders said they would monitor oil markets closely and be ready to seek an increase in supplies if needed. While crude oil prices have declined by 10 percent during the past month, the threat of sanctions on Iran loom next month.

The G8 said the global economic recovery showed promising signs but “significant headwinds persist”.

The mountain cabins at Camp David where a shirt-sleeved Obama hosted the G8 leaders con- trasted with recent tense meetings in European capitals about a sovereign debt crisis that just keeps getting worse.

The economic communique endorsed a recent political shift away from the budget-cutting austerity that has been championed by Merkel and British Prime Minister David Cameron as the route to prosperity.

Instead it recognised a common need to combine budgetary discipline with a growth strategy. This strengthens the hand of socialist French President Francois Hollande before a crucial EU dinner on Wednesday to discuss growth.

Cameron, after an early morning gym workout with Obama, said he detected a “growing sense of urgency that action needs to be taken” on the euro-zone crisis.

“Contingency plans need to be put in place and the strengthening of banks, governance, firewalls – all of those things need to take place very fast,” he told reporters.

European leaders seemed keen to stress that they would stand firm in protecting their banks, after news of escalating bad loans raised the spectre that rescuing Spain’s banks would crash the euro zone’s fourth largest economy.

“We will do whatever is needed to guarantee the financial stability of the euro zone,” EU President Herman van Rompuy said.

Hollande suggested using European funds to inject capital into Spain’s banks, which would mark a significant acceleration of EU rescue efforts. But there was no direct mention of Spain in the communique or any indication of action leaders would take to combat the financial stresses.

There already were signs of a softening in Germany’s austerity stance as the meeting on the global economy began.

Germany’s largest industrial union, IG Metall, struck its biggest pay deal in 20 years yesterday. The 4.3 percent pay increase, more than double Germany’s inflation rate, will boost buying power in the euro zone’s richest nation and lift consumption.

That is something the US has urged as a means to bolster overall growth throughout the world’s second largest economic region.

G8 leaders also raised pressure on Iran over its nuclear program, which they suspect has military objectives, by committing to a common approach.

They pledged to implement sanctions fully against Tehran and indicated they would act together to lower oil prices if needed. – Reuters CAIRO: Egyptians are being called to vote on Wednesday in the historic first presidential election since Hosni Mubarak was toppled last year. The poll will define the path of the Arab world’s most populous nation, currently split between Islamists and members of the former regime.

The poll takes place in a climate of openness and democratic debate, but also insecurity and severe economic stagnation. – SAPA-AFP

Rocket stays stuck…

CAPE CANAVERAL: A new private rocket bound for the International Space Station roared to life for a history-making lift-off yesterday, but remained stuck on the ground.

Even Nasa’s most seasoned launch commentator was taken off guard. “... 3-2-1, zero, and lift-off,” announced George Diller, his voice trailing as the rocket failed to budge. “Lift-off did not occur.” – Sapa-ap NEW DELHI: At least 16 people were killed and more than a dozen injured when their bus hit a truck and caught fire in Uttar Pradesh.

The accident took place late on Friday in Bahraich district, about 130km north-east of state capital Lucknow, police said. At least 60 pilgrims were travelling to the Muslim shrine of Ajmer in Rajasthan when the bus collided with a parked truck. – SAPA-DPA

Saved by ice cream

LONDON: As the rescue helicopter swooped in to land on the beach, worried bystanders rushed over to see what the commotion was about.

Two of the crew leapt out, ordered four ice creams from a cafe and returned with their treats. An RAF spokesman said the helicopter took off from Wattisham near Suffolk for training that included a beach landing. – Daily Mail