By Lisa Bryant
Leaders of the world’s top economies ended a two-day summit in Cannes committed to boosting growth and staunching Europe’s spreading financial crisis, though leaving the specifics of how they will do so unclear.
In one significant step, leaders of the Group of 20 major economies agreed to strengthen the resources of the International Monetary Fund to better battle financial crises like the one now buffeting Europe. But they left the details, including dollar amounts, for later.
Summit host, French President Nicolas Sarkozy, acknowledged the grim mood at the two-day summit – as fears grow of another major recession.
Specifics still pending
Sarkozy said G20 members were committed to using every tool to sustain world growth, but that there was no single answer on how to do so.
The financial problems of Italy and Greece dominated the summit, which took place as the government of Greek Prime Minister George Papandreou teetered on the edge. But a meltdown in Italy, Europe’s third biggest economy, would be far more serious.
Italy agreed to allow the IMF to monitor whether the government implements an ambitious austerity package. IMF chief Christine Lagarde was blunt at a press conference, as she described international doubts.
“The problem that is at stake, and was clearly identified both by the Italian authorities and by its partners, is the lack of credibility of the measures that are announced,” said Lagarde.
Bold actions required
Non-European members at the summit have urged the Europeans to speedily resolve the eurozone crisis. U.S. President Barack Obama said he is confident they can do so. What counts, he said, is action.
“Our European partners have laid a foundation on which to build – and it has all the elements needed for success. A credible firewall to prevent the crisis from spreading, strengthening European banks, charting a sustainable path for Greece, and confronting the structural issues that are at the heart of the current crisis,” said Obama.
Among other measures, the G20 leaders agreed to toughen capital requirements for banks – naming 29 top banks on the list – so taxpayers do not end up bailing out those that go under. The group also vowed to crack down on tax havens and consider new sources of development assistance for poorer nations.