Harper urging fast resolution to Eurozone crisis
Sarkozy signals Greek exit from euro a possibility, $1.4 trillion bailout package overshadows other reforms
The Canadian government says European leaders need "extraordinary actions to address extraordinary circumstances."
But as Prime Minister Stephen Harper begins two days of talks with leaders of the Group of 20 nations in Cannes, France, Canadian officials were at a loss to explain what those extraordinary actions might look like.
The G20 is meeting as Europe convulses over a political and economic crisis that has overshadowed broader discussions on global financial reforms.
A proposed Greek referendum has suddenly thrown a proposed Eurozone bailout package into disarray, delaying its implementation until after Greece votes on Dec. 4.
Greek Prime Minister George Papandreou, who was called to an emergency meeting Wednesday in Cannes with German Chancellor Angela Merkel and French President Nicolas Sarkozy, defended his decision to call the vote despite the wrath it invoked, saying his country must decide whether it wants to stay in the 17-nation eurozone.
A "no" vote could break up the union, lead to the collapse of many European banks and send the global economy spinning back into recession.
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Harper is expected to tell G20 leaders Thursday they can't afford to leave the room without solving the crisis.
Sarkozy and other top EU officials have long held that it was unthinkable for Greece to quit the euro because it would be, Sarkozy has said, "a failure of Europe."
But in a late-night press conference with Merkel, the leaders signalled for the first time that Greece's exit from the euro was indeed possible.
Saying that Europe had "done everything we could" to keep Greece in the eurozone, Sarkozy said "now it is up to them to decide if they want to stay in the euro with us."
That political developments in tiny Greece — which represents less than two per cent of the eurozone economy — could put much of the Continent in jeopardy, and by extension, the global recovery, speaks to a global economic interdependence that the relatively new Group of 20 association was designed to address.
A Harper spokesman insists Europe must forge ahead with implementation details for the $1.4 trillion bailout package, and that Canada wants a speedy resolution.
Spokesman Andrew MacDougall also said the European crisis will not stop the G20 leaders from making progress in other areas, including the reform of global financial institutions that has been on the table since a previous crisis-atmosphere G20 meeting in London in 2009.
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"It is imperative that the G20 shows leadership in moving ahead on critical reforms," Harper said in a statement issued Wednesday as he departed Ottawa.
"Financial markets as well as the public will be looking for a concrete and ambitious action plan coming out of Cannes."
Harper again touted Canada's strong fundamentals to backstop his calls for international action.
But the importance of public perception that the prime minister cited Wednesday is precisely the dilemma facing Greece, and the wider eurozone.
The devil is in the implementation details of a recovery package negotiated behind closed doors by European leaders last week that includes an emergency bailout fund of $1.4 trillion, creditors accepting 50 cents on the dollar of their Greek loans, and an increase in the cash reserves of the largest European banks.
Not only must Greek citizens accept dramatic cuts in pay, pensions and public services, but wealthier European taxpayers — principally Germans — must pay the freight.
"It is imperative that there is widespread support, broad democratic support for these measures because they will unfold over a period of time," Mark Carney, governor of the Bank of Canada, said during testimony Tuesday at a House of Commons committee.