Greek vote eases G20 fears
Some pressure relieved as economic summit begins
LOS CABOS, Mexico – The emerald-green lawns of the time-share condos and all-inclusive resorts seem to gleam in the bright sun as the surf rolls gently against the white-sand beaches of Los Cabos.
It’s an idyllic place to thrash out the terrifyingly uncertain fate of Europe and the global economy.
Leaders of the world’s largest economies began to assemble Sunday in this Baja California desert resort just as Greece’s pro-bailout New Democracy party won the national elections, a vote for the financial status quo that could keep panic under control at least for now. A vote against the pro-bailout party could have forced Greece to leave the joint euro currency, a move that would have had potentially dire consequences for other ailing European nations and the global economy.
“We salute the courage and resilience of the Greek citizens, fully aware of the sacrifices which are demanded from them to redress the Greek economy and build new, sustainable growth for the country,” European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso said in a joint statement.
U.S. President Barack Obama and the summit’s host, Mexican President Felipe Calderon, have been downplaying expectations for the summit.
Obama is seeking bolder, swifter signals from Europe that it will contain its financial mess and keep it from torpedoing the U.S. economy and his re-election chances along with it.
Calderon has given a more optimistic message, including that he expects the G20 to produce record donations to the International Monetary Fund, exceeding member states’ pledges of $430 billion this year and bolstering its ability to conduct more bailouts in Europe.
There were, however, clear signs of deep divisions over this relatively straightforward measure. Calderon said the U.S. would decline to contribute, a decision in line with Washington’s position that more IMF money would be a de-facto U.S. bailout of Europe. It was unclear how much money would come from emerging economies such as Brazil and India, which have been pushing for more say in the governance of the IMF in exchange for greater contributions.