World leaders have thrown their weight behind Greece staying in the eurozone after a day of crisis talks at the G8 summit in Camp David.
G8 leaders said they agreed on the need for a "strong and cohesive eurozone"
"We all have an interest in the success of specific measures to
strengthen the resilience of the eurozone and growth in Europe.”
Earlier France had made its mark on the debate after the country’s new
president and prime minister both insisted Greece should remain in the
single currency.
Francois Hollande, the new leader, said he and the US President Barack Obama
shared “the same conviction that Greece must remain in the eurozone”.
Meanwhile the French Prime Minister Jean-Marc Ayrault said European leaders
must send a strong signal of support to Greece.
“There is a climate of uncertainty which is pushing Greece towards a banking
panic and political instability,” he said in a newspaper interview.
“We must respond by helping the country find the way back to growth.”
Jose Manuel Barroso, President of the European Commission, said he would not
entertain a “Plan B” for Greece, and that the focus remained on a “Plan A”
with Greece part of the eurozone.
Attempts to move the debate to how Greece might be able to remain a member of
the eurozone follow a terrible week for the region which made a Greek exit
seem more likely than ever.
Germany was left isolated after its Chancellor Angela Merkel spoke for the
first time about a possible Greek exit early in the week.
A second Greek election has been scheduled for June 17 after Greek politicians
failed to agree to a new coalition government.
Two polls published yesterday suggested Greece’s anti-bailout leftist Syriza
party is neck-and-neck with the pro-bailout New Democracy party.
The fear among policymakers, investors, and economists alike is that the Greek
banking system will not be able to survive as long as the election, as
people have already withdrawn hundreds of millions of euros in deposits from
Greek banks.
Ms Merkel was also under increasing pressure among the G8 to ease her demands
for austerity, after Mr Obama joined France and Italy in a pro-growth
stance.
The leaders’ statement stressed an “imperative to create growth and jobs,”
while maintaining at the same time a commitment to fiscal consolidation.
They said it was important that European countries take steps to minimise
crisis contagion and warned that while the global economic recovery showed
“signs of promise”, significant “headwinds” persist.
“We agree that all of our governments need to take actions to boost confidence
and nurture recovery including reforms to raise productivity, growth and
demand within a sustainable, credible and non-inflationary macroeconomic
framework,” they said.
Leaders added that investments in education and modern infrastructure would be
needed to raise productivity, with the support of private sector finance.
“We commit to promote investment to underpin demand, including support for
small businesses and public-private partnerships,” the statement said.
The G8 also voiced strong opposition to protectionism, and said they remained
committed to open markets and reducing barriers to trade and investment.
Leaders also highlighted the risk to the global economic recovery posed by
high oil prices and disruptions to supply.
“There have been increasing disruptions in the supply of oil to the global
market over the past several months, which pose a substantial risk to global
economic growth,” they said in a separate statement.
“Looking ahead to the likelihood of further disruptions in oil sales and the
expected increased demand over the coming months, we are monitoring the
situation closely and stand ready to call upon the International Energy
Agency to take appropriate action to ensure that the market is fully and
timely supplied.”
