G20 to press EU on solutions
By Sarah Collins | Friday 15 June 2012
EU leaders are to face their G20 counterparts at a summit, on 18 June, following a pivotal election in Greece that will set the course for the country’s future in the eurozone. European Commission and Council Presidents José Manuel Barroso and Herman Van Rompuy will attend the summit alongside British, German, French, Italian and Spanish leaders, where they say they are aiming to convince their counterparts that the bloc is serious about solving the debt crisis. “We will reaffirm to our G20 partners our commitment to safeguard financial stability in the euro area and its integrity,” they said. “We will also make clear that we want Greece to remain in the euro area while respecting its commitments.”
Van Rompuy has initiated a conference call with British Premier David Cameron, German Chancellor Angela Merkel, French President Francois Hollande, Italy’s interim Prime Minister Mario Monti and Spanish leader Mariano Rajoy to discuss their strategy ahead of the summit. Leaders in Los Cabos, Mexico, will also try to agree an “action plan for growth,» which Van Rompuy and Barroso say should be based on “a balanced combination of fiscal consolidation and structural reforms, including balanced commitments by all G20 members, including the US, Japan, and China”.
EU leaders are struggling to come up with viable solutions to the debt crisis after a second Greek bailout in March and a more recent rescue for Spanish banks failed to calm restive financial markets. Greek citizens will vote, on 17 June, to elect a new government, with recent opinion polls showing the anti-bailout and radical leftist group Syriza is neck-and-neck with the Conservative New Democracy party. The European Central Bank said, on 15 June, that it will continue to provide loans to “solvent” banks after reports surfaced that the world’s central banks were preparing to step in should Syriza win and reject the bailout plan agreed in March, a move that could cut off Greece’s membership of the eurozone. EU finance ministers are on stand-by should they need to hold an emergency conference call after the results begin to filter through. Meanwhile, the Commission has denied that is it planning on relaxing any of the conditions attached to the bailout to placate a new Greek government. “This is the programme that has been agreed by Greece,” said a spokesman for Economic Affairs Commissioner Olli Rehn. “[Changes to it] are not being discussed.”
Spain is also casting a shadow over the G20 after government borrowing costs soared to above 7%, on 14 June, a trigger point for the governments of Greece, Ireland and Portugal to seek large-scale bailouts from the EU and the International Monetary Fund. Eurozone finance ministers agreed, on 9 June, to provide up to €100 billion in loans to Spanish banks, but Eurostat has said that the bailout will add to Spain’s deficit as well as its debt, depending on how the bank rescue is structured.
The weekend will also see the concluding round of parliamentary elections in France, where Hollande’s Socialist party is on track to gain control of the 577-seat National Assembly.