Leaders of the world’s major powers have arrived at the G20 summit in Los Cabos, Mexico, in hope to prop up the global economy.
The leaders are seeking agreement on a plan to boost the IMF’s firewall protecting debt-ridden states.
The commitments in a draft G20 communique include a pledge to consider concrete steps towards a “more integrated financial architecture” in Europe that would include common banking supervision and firm guarantees to repay bank depositors.
Leaders of world’s largest economies voiced unease over what one top official described as “the single biggest risk for the world economy,” reports BBC.
European Commission President Jose Manuel Barroso said “the challenges are not only European, they are global”.
Asked by a Canadian journalist: “Why should North Americans risk their assets to help Europe?” Barroso replied: “Frankly, we are not here to receive lessons in terms of democracy or in terms of how to handle the economy.
“This crisis was not originated in Europe … seeing as you mention North America, this crisis originated in North America and much of our financial sector was contaminated by, how can I put it, unorthodox practices, from some sectors of the financial market,” he said.
U.S. President Barack Obama, concerned that Europe’s debt crisis could deteriorate further and upend his re-election hopes, met with Chancellor Angela Merkel, who is under intense pressure to commit German resources to underpin the euro zone and prevent a catastrophic breakup.
Merkel has been urging other European leaders to agree a road map toward closer fiscal integration that would involve ceding sovereignty over budgets to Brussels and giving more power to the European Parliament, according to Reuters.
However, the dominating issue at the summit was Europe’s battle against a debt crisis that has led Greece, Ireland and Portugal to seek EU/IMF rescues, and forced Spain to seek aid for its banks.
Antonis Samaras, the leader of the New Democracy party, which narrowly won the poll on Sunday, is currently holding urgent talks to form a coalition with the socialist Pasok party and possibly another smaller centre-left grouping.
Samaras said that he would “have to make some necessary amendments” to the terms of the bailout agreement reached with the European Union and International Monetary Fund (IMF), “in order to relieve the people of crippling unemployment and huge hardships”.
Merkel welcomed the Greek result but noted that she could not accept any loosening of the austerity measures and deep structural reforms Athens has agreed to as a condition of its two EU/IMF bailouts totaling 240 billion euros.
“The Greek government will and must deliver on the commitments it has agreed to,” she said.
Many world leaders expressed alarm in Los Cabos on Monday at what they saw as a lack of progress in dealing with the eurozone crisis.
In particular, World Bank chief Robert Zoellick said: “We are waiting for Europe to tell us what it’s going to do.”
Stephen Harper, Canadian Prime Minister, called on eurozone leaders to make structural changes to solve the debt crisis.
Meanwhile, The U.S. has pressed Germany and China to stimulate spending in order to help the world economy.
Rising violence in Syria and the near-collapse of a United Nations-brokered peace plan were also discussed as U.S. President Barack Obama met with Russian President Vladimir Putin. The two super powers have clashed over arming Syria and U.N. sanctions.
Putin called for rules to allow protectionism for countries facing a financial crisis.
“It is time to stop pretending and come to an honest agreement on the acceptable level of protectionist measures that governments can take to protect jobs in times of global crisis,” he said.
“This is particularly important for Russia as our country will join the WTO this year and we intend to take an active part in the discussions on the future rules for global trade.”
Leaders are also set to confirm they will double the IMF’s firepower.
The Fund’s managing director Christine Lagarde said pledges now totaled $456 billion, up from the $430 billion in April, even despite some emerging nations are frustrated with the slow pace of winning more power at the global lender.