Euro crisis ‘main topic’ at G20 meeting

September 20, 2011

, BERLIN, Sept 20 – The eurozone’s debt drama will top the agenda for policymakers at the next Group of 20 meeting, a senior German government source said Tuesday, as concern grows about its impact on global growth.

“The main subject, in the discussions and on the margins, will be the eurozone,” the source said, although the euro crisis is not officially on the agenda.

The G20 meeting will be held alongside the IMF’s annual meeting in Washington at the end of this week.

The crisis is increasingly sparking fears from Europe’s partners about its effect on the world economy, as the International Monetary Fund downgraded its forecast for world output earlier Tuesday.

The IMF also warned about the health of European banks exposed to the eurozone’s debt mountain, saying that if the crisis worsened global financial stability could be at risk.

US President Barack Obama said last week: “We will continue to see weaknesses in the world economy, I think, so long as this issue is not resolved.”

Obama and German Chancellor Angela Merkel spoke by phone on Monday to discuss the need for action on the eurozone crisis, the White House said, amid US frustration at Europe’s slow response.

The two leaders called for “concerted action” to spur job creation and recovery in the global economy.

Earlier Monday, US Treasury Secretary Timothy Geithner said the United States had a huge stake in helping Europe find a “more effective strategy” to tackle its financial crisis.

The other main topics of the G20 will be the health of the global economy, the situation on financial markets and reform of the world monetary system.

However, the source said German Finance Minister Wolfgang Schaeuble would rebuff US suggestions that Europeans should focus more on stimulus to boost their economies and grow out of the crisis than on austerity.

These appeals “do not really bring the debate forward,” the source said. “You can’t fight a debt crisis with more debt.”

Schaeuble “will be firm on the fact that we want to and absolutely have to stick to our budgetary consolidation course,” added the source.

Berlin believes there are other ways of stimulating demand, such as completing the Doha round of trade negotiations.

The talks round was launched in the Qatari capital Doha in 2001, mainly to aid developing countries that felt left out of the benefits of globalisation and the previous round of liberalisation which set up the WTO in 1995.

WTO member states have repeatedly missed deadlines to agree on a global free trade pact.

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