Prime Minister Stephen Harper says there is “money sitting on the sidelines” that can revive the global economy, but none of it is Canadian tax dollars destined for a European bailout.
Harper spoke after the messy conclusion of a G20 summit that was supposed to bring decisiveness and clarity to sovereign debt problems in Europe and produce a road map for future international financial reform.
The whole exercise was geared to forestalling a second global recession that some economists say is already gripping the United States and Europe.
But bold action gave way to infighting, finger-pointing and moralizing.
The leaders agreed that the International Monetary Fund needs to beef up its resources in case of a crisis — but not on how to fund a more muscular IMF.
And the European Union’s own $1.4-trillion bailout package for Greece remains a hostage to Greek politics.
European Commission President Jose Manuel Barroso put a brave face Friday on decisions that haven’t yet been taken or implemented.
“This means we are increasing the global firewall against contagion,” Barroso said of the IMF. “It will allow us to act against crises wherever they occur in a co-ordinated and comprehensive manner.”
But German Chancellor Angela Merkel was more candid. She said “hardly any countries in the G20” had expressed any cash interest in propping up the European bailout fund.
Harper, against a domestic backdrop of troubling new unemployment numbers, was emphatic that however the matter is resolved, Canadians won’t pony up.
“It is the government of Canada’s conviction that Europe remains fully capable of dealing with its own European problems,” he said, speaking to reporters in a rooftop conference room overlooking tens of millions of euros worth of luxury yachts in the French Riviera harbour below.
“There is a lot of wealth here. There is a lot of firepower here.”
And the prime minister implored Europe to get on with it, saying global markets just need some reassurance that there’s a concrete plan.
“There’s a lot of money sitting on the sidelines looking for opportunities,” said Harper. “And I see every indication that markets are constantly searching for good news and opportunities.
“So I think the sooner European leaders and others can simply confirm that they’re moving forward, I think that will be the quickest way to get us out of this crisis of confidence.”
That confidence crisis appeared to infect G20 leaders themselves.
It was agreed the IMF will also monitor Italy’s debt recovery plan, an ominous signal as Europe struggles to get out from under the yoke of Greek sovereign debt. Italy, with an economy many times the size of Greece, has a debt load that is beyond Europe’s capacity to absorb.
The G-20 final communique welcomed Italy’s decision to “invite the IMF to carry out a public verification of its policy implementation on a quarterly basis.”
But the leaders failed to agree on a financial services tax, the so-called Robin Hood tax that the summit host, French President Nicolas Sarkozy, described as “technically possible, financially indispensable and morally inarguable.”
The G20 leaders won at least an acknowledgment from China for the need “to move more rapidly toward market-determined exchange rate systems,” according to language in the final communique.
The world’s biggest economies also agreed to “refrain from competitive devaluation of currencies.”
China, with its fixed yuan, has massive cash reserves and trade surpluses that Harper has said are “unsustainable” and a threat to global economic stability.
And the summit leaders agreed to appoint Bank of Canada governor Mark Carney to head the Financial Stability Board, tasked with overseeing regulation of the world’s biggest banks.
Agreement was also reached to censure the world’s tax havens.
Yet the Cannes communique was all but overshadowed by political developments playing out in Greece, with potentially global implications.
“Put simply, the world faces challenges that put our economic recovery at risk,” U.S. President Barack Obama told his summit-closing news conference.
The government of Greek Prime Minister George Papandreou hung in the balance Friday and whether his country would exit the 12-year-old, 17-member eurozone was still in play.
Sarkozy had delivered an impassioned warning Thursday evening, calling the euro “the beating heart of Europe” and saying the common currency was a guardian against another European war.
Greece, with fewer than 11 million citizens and less than two per cent of the eurozone economy, is an unlikely linchpin — or fuse.
Harper said before leaving France that the Greek referendum idea is now off the table. He said Papandreou got the message loud and clear during a visit to Cannes on the eve of the two-day summit earlier this week.
“If you don’t accept the (bailout) plan, you’re going to be outside the euro,” Harper said matter-of-factly.