The world’s biggest economies must commit to a strong Europe and could agree to further bolster the IMF’s ability to contain fallout from Europe’s debt crisis, Mexican President Felipe Calderon said on Saturday.
Calderon will host the G20 leaders at a summit starting today in Mexico’s Pacific resort of Los Cabos, with the meeting over-shadowed by crucial elections in Greece and mounting worries about Spain and Italy.
“Even though we don’t expect to reach specific agreements on Europe ... I want to see language and promises which are much more oriented to a new, stronger Europe, a Europe of the 21st century,” Calderon told international news agencies.
Greece’s elections yesterday could help decide whether the country will remain in the eurozone, battling a debt crisis that has dragged on for two-and-a-half years. Calderon said it was important to be prepared for any scenario in terms of the result.
Mexico’s first priority for the summit was to finalize G20 members’ pledges to give the IMF more crisis-fighting resources, Calderon said.
In April, G20 countries pledged at least US$430 billion in new loans to the IMF so it could help countries hit hardest by the debt crisis. However, emerging market powers such as Brazil, China, Russia and Mexico have not yet said what specific amount they will contribute.
“I estimate that it could be a bigger capitalization than the preliminary agreement reached in Washington, which will be finalized here, but I don’t want to speculate how much,” Calderon said, adding it was “a pity” that Canada and the US were not chipping in.
Calderon would not be drawn on the specifics of Mexico’s contribution, which should be at least US$8 billion, given the country’s share of the IMF’s capital funding.
He said it would be more than US$1 billion, but would not comment on whether it would exceed US$10 billion, the amount Brazil has named as a yardstick for its contribution.
Former British prime minister Gordon Brown wrote in a column for Reuters that the G20 must produce a concerted global action plan, including a big European firewall to stop contagion and a comprehensive growth plan.
Calderon said that although it would not be possible to solve all of Europe’s problems at the G20 summit, the region was on the right track.
The most important thing is for Europe to use the opportunity to forge closer links on budgets and banking to make the region more resilient, he said.
“In whatever case, I think that our contribution in the G20 ... is to create the right conditions so that the fate or the economic future of Europe does not depend on one case,” he said. “That implies first making progress in the construction of the EU.”
EU leaders are scheduled to meet from June 28 to June 29 to consider laying out a roadmap for fiscal and possibly banking union in the region.