Most of the leaders of the free world are meeting at the G8 Summit today at Camp David, and it sounds like the event has the look of an intervention where the other heads of state try to sit Angela Merkel down and convince her to reverse the austerity policies that are crushing European economies and threatening the euro currency union. But so far, Merkel won’t change her mind:
Obama, speaking at the opening of the session, confirmed they will focus on measures to prevent the break-up of the eurozone, in particular the potential exit of Greece.
But there remains a huge gulf between the European leaders over how to kick-start the economy, a clash between the pro-growth French approach and the deficit-cutting approach of the Germans [...]
The bulk of the agenda Saturday is being given over the euro crisis, with the new French president François Hollande lined up with Obama in favour of a stimulus package and Merkel holding out.
Also attending are Canada’s prime minister, Stephen Harper, the Italian prime minister, Mario Monti, the Japanese prime minister, Yoshihiko Noda, and the Russian prime minister, Dmitri Medvedev, who is attending in place of the Russian president, Vladimir Putin. There are also two European Union representatives.
These aren’t the only conflicts at the summit, many of them owing to the new French Prime Minister’s arrival on the scene. Hollande wants to exit his country’s troops from Afghanistan by the end of the year, against the wishes of other NATO members. He also supports a financial transactions tax, as his predecessor Nicolas Sarkozy did. But Britain rejected that proposal.
Merkel, meanwhile, had to put out a fire at home after a Greek paper reported that her government suggested that Greece hold a referendum on staying in the euro alongside their Parliamentary elections on June 17. Merkel denies the allegation. I’m old enough to remember that George Papandreou, the former Greek Prime Minister, suggested a referendum on the austerity/bailout package and was thrown out of office, in a type of palace coup engineered by European leaders, for his trouble. There’s no way to know if this euro story is true, but clearly only one group is allowed to make suggestions on referenda, and it’s not the elected leadership in Greece.
As long as the leaders in Europe remain both committed to the euro and committed to policies that will destroy many of the countries in the euro, the monetary union is untenable. But anyone looking for wiggle room from Germany to pursue a new set of policies needs to strain their eyes, because so far there’s nothing to see.
…the G8 communique on economic matters is a bunch of gobbledygook which at least uses the word “growth” a few times, but which shouldn’t be seen as anything like a change in direction.