Global General

EU seeks euro stability on G8 summit

(Xinhua)
Updated: 2011-05-27 07:12

From L-R, G8 leaders, European Council President Herman Van Rompuy, Japanese Prime Minister Naoto Kan, Italian Prime Minister Silvio Berlusconi, Canadian Prime Minister Stephen Harper, German Chancellor Angela Merkel, French President Nicolas Sarkozy, US President Barack Obama and European Commission President Jose Manuel Barroso are seen during a round table meeting at the G8 summit in Deauville, northern France May 26, 2011.  [Photo/Agencies]

DEAUVILLE, France - The European Union struggled Thursday to reassure G8 partners on the future of the euro, insisting that every effort will be taken to avoid a default by Greece that could undermine the currency's viability.

"We will not let the euro fail," said Herman Van Rompuy, president of the European Council. "We will make every effort to avoid a (Greek) default or a credit event."

Economic issues dominated the first day of the G8 summit in this wind-battered resort on the north-west coast of France.

Leaders also looked at Japan's efforts to rebuild its economy after the earthquake and tsunami in March this year, and considered the role of the Internet and Green energy in stimulating economic growth.

Nuclear safety in the aftermath of the crisis provoked by radiation leaks from Japan's tsunami-damaged Fukushima power plant was also high on the agenda.

French President Nicolas Sarkozy, who chaired the meeting, said there was broad agreement among the leaders to introduce tough new international safety standards.

"We all want to adopt very high level safety regulations that would apply to all nations that have civil nuclear power," Sarkozy told a news conference. "The safety level should be the highest ever."

Japanese Prime Minister Naoto Kan offered to take a lead, working with the International Atomic Energy Agency.

On Friday, the leaders are expected to wrap up the summit by approving a multibillion dollar funding package for Egypt and Tunisia as part of broader support for democracy movements in the Arab world.

Concerning has been mounting in recent weeks that despite a 110 billion euro (156 billion US dollars) bailout from the European Union and International Monetary Fund last year, Greece will not be able to meet deadlines for paying back its debts and could be forced to default, a scenario which many believe could have a catastrophic impact on the euro.

That concern has led to the euro falling against other major currencies. Officials at the G8 said the United States and Japan had raised concerns that the eurozone's debt crisis could have a negative impact on the wider world economy.

Van Rompuy sought to calm those concerns insisting that EU headquarters is confident that Greece will push through additional austerity measures needed to get its deficit down and highlighting more positive news from elsewhere in the euro-zone.

"The EU economy is firmly on the path to recovery," he said. "Our macroeconomic fundamentals are clearly better than those of other advanced economies."

Sarkozy also pointed at risks to the world economy elsewhere, speaking of the need to reduce "factors of tension and imbalance" an apparent reference to the U.S. deficit, rising commodity prices and the strength of the Chinese currency. The French leader said he would taking those issues to the summit of the G20 which he is scheduled to host in November.

Officials from several G8 nations stressed that this summit was not the occasion for picking a successor of scandal-hit IMF director Dominique Strauss-Kahn.

However on the sidelines of the meeting discussion was intense over who should head the International Monetary Fund.

Sarkozy said there was broad support for French Finance Minister Christine Lagarde to replace her compatriot Strauss-Kahn who is under house arrest in New York on charges of sexually assaulting a maid in his hotel.

However leading emerging economies have argued the time has come to end the arrangement under which a European takes the IMF top job while American officials are appointed president of the World Bank.

"What I'm picking up is that everybody thinks Christine Lagarde is a woman of great qualities," Sarkozy said.

He hinted that, one day, the job could be offered to a non-European, but said now was not the moment to change, given the IMF's current focus on the problems of the eurozone where Ireland and Portugal have followed Greece in the past few months in receiving EU and IMF bailouts.

"If you look at the monetary news at the moment, it's coming more from Europe than from the emerging economies .. so we think its a good idea that the head of the IMF at the moment should be a European," he told a news conference.

Directors of several leading information technology companies were invited to attend the G8 summit, following a separate conference in Paris that debated the future of the Internet and the role of government regulation in cyberspace.

They reported to the summit that regulation is needed, for example to protect children or prevent copyright privacy, but stressed that it should be kept to a minimum to avoid stifling innovation in a sector which accounts for 6 percent of the global economy.

The Internet is "one of the greatest forces for good" in the world, said  Eric Schmidt, executive chairman of Google. "We all believe that getting the governments to understand that is why we are here.'

Schmidt was joined at the G8 by Mark Zuckerberg, the founder of Facebook, Maurice Levy  of the French company Publicis, Stephane Richard of France Telecom and Hiroshi Mikitani from Japan's largest online retailer, Rakuten.

They agreed that the so-called E-G8 summit of tech executives should become an annual event.