Germany says G20 should look beyond euro zone

BERLIN Tue Jun 12, 2012 11:52am EDT

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BERLIN (Reuters) - Group of 20 leaders meeting in Mexico next week to discuss the state of the global economy should not focus exclusively on problems in the euro zone but also talk about the strained U.S. budget and Chinese currency, German officials said on Tuesday.

The summit in Los Cabos on June 18-19 seems likely to be overshadowed by the woes of Europe's single currency bloc, coming a week after Spain announced plans to seek EU aid for its banks and a day after Greece holds a pivotal election.

German Chancellor Angela Merkel faced pressure from her European partners and the United States at a G8 summit in Camp David last month to take bolder measures to spur growth and stem a debt crisis that has been raging for over two years.

Tuesday's comments, given by senior German officials on condition of anonymity, show that Merkel is keen to avoid a similar showdown in Mexico.

"The euro zone will surely be a topic, but as Europeans we also want to talk about other themes related to the global economy that go beyond the euro zone, for example budget consolidation in the United States, currency flexibility in China and structural reforms in emerging markets," one of the officials told reporters.

He said rising protectionism and the broader investment climate were other topics that G20 leaders needed to focus on.

"We think when talking about global growth it is important to look beyond the euro zone, not to limit the discussion to Europe," the official added.

Merkel has rejected radical new ideas like joint euro zone bonds or a banking union, which some experts think could help solve the crisis. She says such steps would backfire if they are taken before euro zone countries integrate more and give up control over their budgets to European institutions.

She is pressing for an EU summit at the end of June to agree a mandate for moving towards a form of "fiscal union" in Europe. Officials said this topic would also be discussed in Mexico.

The most immediate threat to the bloc is from the Greek vote on Sunday, where a victory by a radical left party that opposes the strict terms of the country's bailouts could increase doubts about whether it can remain a member of the euro zone.

Merkel and some other leaders are likely to be in the air on their way to Los Cabos when the Greek vote results become known.

The German officials said it was not clear whether there would be a joint statement reacting to the Greek outcome in Los Cabos, but said if there was one it was likely to be issued by European finance ministers and not the broader G20.

At the summit, Germany expects G20 leaders to agree an action plan for strengthening the global economy over the medium-to-longer term, but said this would not involve pledging new stimulus measures.

The officials also made clear they wanted to separate a discussion over resources for the International Monetary Fund (IMF) and a debate on reforming voting powers in the global lender, putting Germany at odds with some of the so-called BRICS countries - Brazil, Russia, India, China and South Africa.

(Reporting by Noah Barkin and Gernot Heller; Editing by Peter Graff)

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Comments (3)
JamVee wrote:
I don’t blame Germany. President Obama has been, regularly, trash talking Europe’s fiscal irresponsibility, and blaming the US Market’s turmoil on them too.

It’s time to reminded our President, and the general public that the root causes of the worldwide economic crisis were all centered in the US. Our overheated housing market, our Congress’ mandate to lenders that they give mortgages to unqualified borrowers (anyone that had a pulse), and then followed by our bank’s utter failure to recognize the toxicity of mortgage backed securities, which they sold to governments, all over the world, as SAFE investments.

Jun 12, 2012 11:39am EDT  --  Report as abuse
SeaWa wrote:
Many Europeans have always blamed the US for (Europe’s) failures. They never seem to blame us for their successes though. That will never change.

Jun 12, 2012 12:27pm EDT  --  Report as abuse
uc8tcme wrote:
Ok, the US will take most of the blame for the 2008 crisis. But The EU’s problems now and their lack of recovery stems from them putting together (hastily) an entirely new economy that has been on shaky ground from the beginning. Just because you put together the economies of nine countries don’t make them the strongest economy. The Euro is only stronger than the Dollar on the markets is because the GDP of those nine countries is slightly larger than the USA by itself. You can not mesh nine political, social, and economies into one and expect perfect harmony. The dollar is still the world’s currency, with the full backing of one US government – not nine individual countries.

Jun 12, 2012 3:08pm EDT  --  Report as abuse
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