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5th Dec 2022

Lacklustre G20 closes after being hijacked by eurozone crisis

  • The Greek referendum scare put the meeting into a tailspin (Photo: diplomatie.gouv.fr)

Overshadowed by a tumultuous few days in the eurozone, a two-day meeting in the south of France of the world's most powerful leaders drew to a close Friday (4 November) with few concrete agreements, leaving EU leaders no wiser on how to control their single currency crisis.

The meeting wrapped up with a promise to boost the reserves of the International Monetary Fund - which is involved in loans to Greece, Ireland and Portugal - but details on how this will be done remain vague and G20 finance ministers will only tackle the issue in February.

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Meanwhile, there were no concrete offers to help boost the eurozone's own underfunded bailout fund.

Eurozone leaders - with an eye on the G20 meeting - last week called for the €440 European Financial Stability Facility to be reinforced by investments from outside countries.

But German Chancellor Angela Merkel admitted after the meeting that "there are hardly any countries that have said already they will cooperate with the EFSF."

"I'm not going to pretend the problems of the eurozone have been fixed - they haven't," UK prime minister David Cameron said after the meeting.

US President Barack Obama noted that "there is hard work ahead".

The gathering was blown of course by a surprise announcement by Greek Prime Minister George Papandreou that he intended to call a referendum on the country's second EU-IMF bail-out package, agreed just last week.

The uncertainty prompted by the announcement sent EU leaders and markets into a tailspin, and completely swallowed up the first day of the G20 meeting. The resulting pressure saw Papandreou step back from the decision but the distraction and disarray saw potential investors, such as China, refuse to make any commitments.

Obama said Greece's actions "got a lot of people nervous" while European Commission President Jose Manuel Barroso said the uncertainty was "unhelpful".

Meanwhile the other big limelight stealer at the summit was Italy, whose borrowing costs are at almost unsustainable level.

Under pressure from G20 colleagues, Prime Minister Silvio Berlusconi agreed to have his country's policy implementation monitored by the IMF. The concession comes amid concerns about the pace of reform in the eurozone's third biggest economy.

It comes on the back of last week's decision to have the European Commission oversee the situation on the ground, too.

French leader Nicolas Sarkozy, who had been hoping to see a successful G20 summit under his watch, put a brave face on the outcome.

His main point was to highlight progress towards agreement on a financial transaction tax, which got non-committal look-in in the conclusions.

Noting that France was "all alone" on this issue at the beginning of the year, he said the European Commission, Germany, Spain, South Africa and Brazil were among those now supporting the idea. Washington is not on the list however while the idea remain strongly opposed by the UK.

The G20 also pledged to fight cross-border tax evasion, another point vigorously taken up by President Sarkozy.

He pointed out that while there were "several dozen" tax havens in 2009, there are now just 11 in the world. "We don't want any more tax havens. Our message is clear," he said, highlighting Switzerland and Lichenstein as those countries that ought to be doing more to end banking secrecy.

Berlusconi heads to G20 amid mutiny at home

Silvio Berlusconi’s position as prime minister of Italy is increasingly uncertain after a gruelling day of emergency meetings and a growing mutiny at home.

EU presidents give bloc pre-G20 pep talk

Ahead of the G20 meeting of leading world economies, EU presidents Herman van Rompuy and Jose Manuel Barroso have given the bloc’s member states a ‘pep talk’, saying that foreign governments need to make a “constructive contribution” too.

China shows interest in sponsoring EU bail-outs

Chinese diplomats are awaiting a detailed proposal on taking part in the EU bail-out fund, the EFSF, while promising not to push for market economy status or lifting the arms embargo in return.

Frustration on eurozone crisis to mark EU-US summit

EU and US leaders will gather for a bilateral meeting on Monday with little of substance likely to be agreed and against a backdrop of exasperation in Washington over the handling of the eurozone crisis.

EU to G20: We will not take 'economic lessons'

The EU is not about to take economic lectures from its G20 partners, the EU commission president said on Monday amid fears the eurozone crisis could put the global economy back into recession.

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