* Spotlight at summit no longer on Europe's debt crisis
* Early signs of economic recovery give EU confidence
* ECB's Draghi warns pick up is "very, very green"
By Luke Baker
ST. PETERSBURG, Russia, Sept 6 For the first
time in at least three years, European leaders have found
themselves out of the economic firing line at a Group of 20
summit, with emerging nations' troubles taking the spotlight.
At previous meetings in Los Cabos, Cannes, Seoul and Toronto
since 2010, top of the agenda has usually been Europe's debt
crisis and its impact on financial markets and the global
economy. Europe felt whipped; the class dunce.
But nascent signs of a turnaround, with growth and exports
slowly picking up and consumer confidence rising, has given the
continent respite. U.S. President Barack Obama even addressed
the issue at the start of his end-of-summit news conference.
"For the first time in three years, instead of an urgent
discussion to address the European financial crisis, we see a
Europe that has emerged from recession," he said.
Instead, it has been emerging markets, and particularly
financial uncertainty in India and Brazil, that has been the
major point of economic discussion in St. Petersburg.
"I want to tell you, at this G20 we were no longer the focus
of attention," said European Commission President Jose Manuel
Barroso, with a sense of relief and the slightest of smiles.
His assessment was borne out by others, although China
pressed the European Union to do more to foster growth and the
final summit communique urged the European Union to press ahead
firmly with plans to establish a single banking framework.
"The structural problems are far from solved and now is no
time to be arrogant," China's Deputy Finance Minister Zhu
Guangyao told reporters on Thursday.
Yet EU officials are hardly cracking open the champagne.
While exports and growth have picked up in some euro zone
countries, it is by no means across the board. And the
structural reforms that are at the heart of the recovery plan
are not always consistently being put in place.
What's more unemployment, while no longer rising, is still
hovering at record highs of 12 percent. In Greece, Spain and
Portugal, youth unemployment is near or above 50 percent.
"We should avoid any kind of complacency," said Barroso. "It
is critically important in Europe - and also in other parts of
the world - that we make all the efforts to make this recovery
sustainable over time."
European Central Bank chief Mario Draghi made clear on
Thursday that the rebound was nascent at best and it would be
some time before anyone could conclude it was sustainable.
"I am very, very cautious about the recovery," he said
following a meeting of the bank's policy-setting committee.
"It's just the beginning. These shoots are very, very green."
He left open the possibility that interest rates, already at
a record low 0.5 percent, could be cut further.
For European policymakers, the biggest challenge in the
coming months and even years is keeping up the pressure on
member states to implement the structural reforms to labour
markets and pensions systems they have promised.
While countries that have received financial aid - Greece,
Ireland, Portugal and Cyprus - are under specific programmes and
have strict reform targets to meet, the bigger concern is larger
economies such as France and Italy.
France has been given two extra years to bring its budget
deficit down to the EU limit of 3.0 percent of gross domestic
product, and was expected to carry out far-reaching reforms to
its pensions system as a result. Those reforms have so far
fallen short of what EU policymakers expected.
"France is a problem," a senior EU official said on the
sidelines of the G20 summit. Italy too is a concern, with
political instability surrounding Silvio Berlusconi's future
making it difficult to implement long overdue reforms.
"The biggest threat to the euro zone now is not so much
financial instability, it's political instability," said the
official, cautioning against complacency.
And the in the final statement from the summit, the G20
countries also made clear that Europe should not take its foot
off the accelerator when it comes to economic reform.
"The euro area commits to... moving ahead decisively and
without delay toward a banking union," it said, raising one of
thorniest issues the continent faces in the coming months.