EU reform plan wins G20 backing
Europe won support from world leaders last night for an ambitious but slow-moving overhaul of the euro zone, even as pressure built in financial markets for quicker solutions to its debt crisis that threatens the world economy.
Europe told a Group of 20 summit it intends to work on concrete steps to integrate its banking sectors, a major step long pressed by the United States and other nations to break the cycle of debt-laden countries bailing out their troubled banks which only pushes governments ever deeper into debt.
US president Barack Obama said the sense of urgency amongst European leaders was clear and they knew what steps were needed to "break the fever" of an escalating debt crisis.
"None of them are going to be a silver bullet that solves this thing entirely ... in the next week or two weeks or two months, but each step points to the fact that Europe is moving towards further integration rather than break-up," Mr Obama told reporters at the end of the two-day summit in a Pacific resort.
US treasury secretary Timothy Geithner said a strengthened framework for a euro-wide fiscal and banking union to underpin the common currency would help restore Europe's economic growth and lower painfully high borrowing costs for indebted countries.
International Monetary Fund chief Christine Lagarde hailed the progress saying "the seeds of a pan-European recovery plan were planted.""It doesn't matter if it takes a long time, it has got to be done well," she said, adding that immediate measures and longer-term ones must be pursued in parallel.
G20 leaders now await a European Union summit next week where European officials say they will launch the long process of deeper integration, starting with a push for banking union, with an aim of finalising a broad plan by December.
Canadian prime minister Stephen Harper, a critic of Europe's progress to date, said it was now getting to the root of its debt crisis. "What will be important, what we'll be watching for next week and going forward will be the concerted, coordinated action that will actually make these things happen," Mr Harper said.
Financial markets have yet to be convinced about the chances of agreement. Germany has resisted taking on euro-wide financial risks if its citizens have to foot too much of the bill, while others, such as France and Italy, want to move more quickly.
Although the danger of Greece crashing out of the euro zone eased after weekend elections, risks are mounting that Spain, the euro zone's fourth-largest economy, will need a full-blown international rescue as its longer-term debt yields hover above 7 per cent, a level that has forced other euro countries to seek bailouts.
The tensions over the world economy and the round-the-clock discussions contrasted with the laid-back atmosphere of Los Cabos, a beach resort at the tip of Baja California in Mexico.
The summit declaration was drafted at a hotel next to the adults-only, clothes-optional Desire Resort And Spa.