World leaders back Greece to stay in eurozone as global economy shows promising signs

 

 

 

WORLD leaders backed keeping Greece in the eurozone yesterday and vowed to take all steps necessary to combat financial turmoil while revitalising their economies.

 

The Group of Eight leaders of the world's major economies meeting at Camp David in Maryland, US, said the global economic recovery showed promising signs but "significant headwinds persist".

 

"Against this backdrop, 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," it said.

 

With the pressure from stock markets on world leaders to come up with a decisive plan for solving the crisis, it emerged that the Germans were resisting the inclusion of details in the final communique about the best course of action for the eurozone.

 

The so-called sherpas, appointed by national leaders to draft summit communiques, were at work until 4am yesterday trying to forge a common position which said something specific about the euro crisis.

 

It was being suggested that the Germans were pressing for specifics to be deferred to an informal EU council later this week, and arguing it was not the business of the G8 -- including Canada, Russia, Japan and the US -- to tell the EU states how to handle their economy.

 

British Prime Minister David Cameron's aides took the view that it would look distinctly odd if the communique did not highlight solutions.

 

The discussion on the global economic crisis at Camp David was opened yesterday morning at the request of US President Barack Obama by Italian Prime Minister Mario Monti, seen as the power broker in Europe between austerity and growth factions.

Referring on CNN to the austerity and growth divide, Mr Monti said: "I think these two positions need to be bridged.

 

"If there is demand to remove bottlenecks in the supply of goods and services -- so, broadly, investment demand -- then I think we regard it more positively than the most conservative European authorities do. On the other hand, if it is an across-the-board crusade for more demand, then I believe that the German reluctance to that is not entirely unfounded."

 

Mr Cameron said: "What is required is a sense of urgency but then, clear action for strong banks and strong contingency plans for whatever might happen. The strengthening of the banks, governments and firewalls, all of those things need to take place very fast."

 

He said German Chancellor Angela Merkel was right to say every country needed strong deficit plans.

 

"Growth and austerity are not alternatives," he said, adding that the eurozone needed to follow the UK monetary policy, a reference to quantitive easing.

 

© Observer

- Patrick Wintour in CHICAGO