Europe Strives to Convince G20 over Debt Crisis
Europe sought Saturday to convince its G20 partners that it can resolve a debt crisis that is threatening to drag the world economy back into recession as finance chiefs held key talks in Paris.
While finance ministers from the world's top economies huddled over measures to keep world growth from stalling, protesters began taking to the streets for worldwide protests to vent anger at alleged corporate greed and government cutbacks.
The G20 nations, which represent 85 percent of the global economy, are seeking to come up with concrete steps to boost growth that their leaders can announce at a summit next month, with China under pressure to move towards the convertibility of its currency and stoke domestic demand.
Among other measures, the G20 finance ministers were to commit in a final statement to ensuring the International Monetary Fund has adequate resources to deal with the debt crisis if it continues to spread, several sources close to the talks told Agence France Presse.
Developing countries have spoken out in favor of boosting the IMF's firepower in order to help Europe -- something Germany is hesitant about and the United States opposes.
"The G20 is discussing strengthening the IMF's resources," said a source close to the talks.
"It's unlikely there will be a major breakthrough on Saturday, it will be up to the heads of state to decide" when they meet on November 3 and 4 in the French Riviera resort of Cannes, added the source.
The G20 nations are also expected to praise the Eurozone’s efforts to contain the debt crisis, while urging it to provide a credible plan to resolve it by the Cannes summit.
They are also expected to reiterate pledges to undertake steps to support global growth and provide support to banks.
The Eurozone is under pressure to quickly come up with convincing measures to tackle the debt crisis, which is spreading to banks and threatens to ensnare major countries such as Italy and Spain.
On Friday, U.S. President Barack Obama called German Chancellor Angela Merkel to discuss the crisis and said the two should "stay in close contact" in the run-up to the G20 summit.
"Everyone is waiting to see if the Europeans do what they need to before showing their cards," said the source. "Nobody wants to give the Europeans a blank cheque."
U.S. Treasury Secretary Timothy Geithner said Friday the G20 was looking for a "clear commitment" from Europe.
"What you need is the clear commitment by the governments, that they will do what is necessary to hold this together and put as much resources behind this as is necessary," Geithner told CNBC television from Paris.
While Europe "is clearly moving" to deal with the crisis, he added: "The hard part is still ahead, which is to design a strategy that meets those objectives."
Elements of that strategy have become apparent in the past week, with top officials warning that investors are likely to lose more than the 21 percent on Greek sovereign bonds already agreed in July as part of a second bailout for Athens.
Experts say Greece needs to cut its massive debt by around 50 percent to stabilize its finances.
That would send shockwaves through the continent's financial and banking system.
The representative of private holders of Greek bonds said forcing them to accept greater losses would only encourage investors to sell other Eurozone bonds.
"We do not see that a compelling case has been made to reopen the deal," Charles Dallara of the Institute of International Finance told the Financial Times.
European officials have warned banks they need to urgently boost their capital buffers -- according to some estimates by up to 300 billion euros ($415 million).
After finally getting approval this week on boosting their European Financial Stability Facility (EFSF) bailout fund to 440 billion euros ($600 billion), Eurozone leaders are already studying ways to leverage its assets up to 2.5 trillion euros.
The new-look EFSF will be able to inject money into shaky banks or intervene instead of the European Central Bank to support weaker Eurozone countries facing problems in raising fresh funds on the markets.
Protesters meanwhile launched worldwide street demonstrations Saturday against corporate greed and biting cutbacks in a rolling action targeting 951 cities in 82 countries.
Inspired by the "Occupy Wall Street" movement in the United States and Spain's "Indignants", people took to the streets in Sydney, Hong Kong and Tokyo in the opening hours of the unprecedented global outcry.
Source: Agence France Presse
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