November 4, 2011

G20 Fails to Provide Money for Europe

Greek drama overshadows other goals

Eurozone leaders were disappointed in their quest to find contributions to the European Financial Stability Facility at the conclusion of the G20 meeting in Cannes, France, on Friday, with all interested nations holding back until more details for the final structure of the beefed-up fund are worked out.

Greece's flirtation with a referendum on its latest bailout package overshadowed the G20's main goals, which included French President Nicolas Sarkozy's objectives of possible changes to the global financial system and measures to combat commodity price volatility.

G20 leaders urged the eurozone to resolve its issues, and postponed until 2012 any additional assistance to the International Monetary Fund to address the financial crisis. Reuters reported that Australian Prime Minister Julia Gillard's words reflected the overall mood of attendees when she said, "Europe needs to get its own house in order." German Chancellor Angela Merkel said in the report, "There are hardly any countries here which said they were ready to go along with the EFSF."

Worries about Greece combined with anxiety over Italy, which accepted IMF supervision of its attempts to beat its own financial troubles. Prime Minister Silvio Berlusconi said that the IMF had offered to provide funding to Rome but was turned down. Italy is not the first country to surrender some financial autonomy during the ongoing crisis; it joins Ireland, Portugal and Greece in bowing to outside influences.

Discussions did take place on boosting resources of the IMF, although no specific figures were decided. Instead that was pushed off till next year, along with decisions on the possibility of pooling eurozone countries' rights to borrow from the IMF to build a fund that would shore up vulnerable countries like Italy and Spain.

There is still a shadow hanging over the meeting as Greece awaits the outcome of a confidence vote on Prime Minister George Papandreou. If he loses, Athens could default and the eurozone would face far larger problems than those it has already dealt with.

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