The G20 summit concentrates on Europe
There is a general determination to resolve the crisis. The European Union provided very coherent and cogent arguments, reported Chancellor Angela Merkel, speaking at the G20 summit. Economic growth and international trade were also on the agenda of the summit in the Mexican resort of Los Cabos.
Angela Merkel stressed that discussions on how to resolve the sovereign debt crisis focused on a mix of "fiscal consolidation, initiatives for growth and further strengthening European cooperation". The EU Council will stipulate the details when it meets on 28 and 29 June.
International Monetary Fund strengthened
The Chancellor praised the spirit of camaraderie which surrounded the international discussion. A large number of partners pledged to strengthen the International Monetary Fund (IMF) and "once again surpassed the expectations we had with respect to the replenishment of IMF funds." Pledges were made by South Africa, Brazil and many emerging economies as well as China and Japan, she reported. "That was a truly global effort," declared the Chancellor.
In Los Cabos the Chancellor also noted the conclusion reached by the German Federal Constitutional Court, that the German Bundestag is entitled to be informed about all issues relating to the European Stability Pact. "We will uphold the decision of the Federal Constitutional Court, and now we have a clear yardstick." Angela Merkel stood by her call for "more Europe". "I believe we were talking about a European institution that could act as a watchdog for the banking sector," she said. More pro-growth measures are also needed, as are efforts to agreed on guidelines laying down across-the-board standards for securing deposits and restructuring banks, she added.
We must gauge our strength realistically
Before the summit Angela Merkel made it quite clear that Germany’s strength is not inexhaustible. The euro zone will only manage to weather the crisis if all member states gauge their respective strengths realistically. In Mexico the Chancellor reasserted the belief of the German government, that measures to foster growth must go hand in hand with budget consolidation, both of which are indispensable.
The Group of Twenty (G20) has, since 2009, been the central forum for international economic cooperation. The most important industrialised nations and emerging economies deliberate on the economic and financial-policy measures required. The next summit is to be hosted by Russia in 2013, followed by Australia in 2014.
No new borrowing to fuel growth
In the run-up to the summit Angela Merkel also pointed out that the euro zone alone cannot put in place the conditions for global growth. Europe’s partners within the G20 will, she said, have to resist the temptation to generate growth by borrowing more.
In Los Cabos, the G20 adopted an action plan to this end. The consolidation of public budgets is an indispensable and essential element of this, declared Angela Merkel before the summit. "Germany has made an unequivocal commitment to cutting its debt and to putting its economy on a sustainable footing," she said.
For global climate change mitigation and environmental protection
Development policy, trade, employment and the international financial markets were also on the summit agenda. Green growth is a priority of the Mexican host. The aim is to find ways of reconciling the imperatives of economic growth, climate change mitigation and environmental protection around the globe.
German model as an example
Looking at employment, the heads of state and government discussed primarily the global problem of youth unemployment. The funds freed up to promote growth must be used such that they achieve genuine impacts, demanded Angela Merkel "We are talking here about fighting youth unemployment. Growth per se is important, but we must never lose sight of the essential truth that we are working for real people."
Even before the summit Angela Merkel was convinced that the issue of youth unemployment is an area in which Germany can offer the wealth of experience it has gained with its dual vocational education system, in which trainees split their time between theoretical school-based instruction and practical in-company training.
The Chancellor announced that Germany would not be mincing its words when it comes to free trade. "All too often only lip service is paid to free trade." The G20 states do not always take their voluntary commitments vis à vis trade barriers seriously enough. "Protectionism is an obstacle to growth," declared Angela Merkel.
Strengthening emerging economies
In terms of strengthening international institutions, the Mexico summit focused on realising the quota reform of the International Monetary Fund (IMF) adopted in 2010. Emerging economies are to be granted more influence within the IMF in view of the changed economic circumstances. Germany has already implemented the change at national level, reported the Chancellor.
Jun 18, 2012