Despite international concern over Europe's economic woes, the EU has arrived at the G20 summit in Mexico with its head up high. The message is: 'We're fixing our problems. Now it's time for you to fix yours.'
After the narrow election victory of the conservative Nea Dimokratia in Greece, the EU is trying to get back to normal at the G20 summit in Mexico. "The (election) result gives hope that Greece will soon have a stable government. That is an important message for Europe," German Chancellor Angela Merkel said on Monday after arriving in Los Cabos.
Greece now has to fulfill its reform pledges, and the EU will discuss the details with the new government, she added, trying to wrap up the discussion about Europe's Greek problem. "The G20 summit is taking place at a time when growth and employment are at the very top of the agenda on all continents. And each continent here will have to make its contribution," Merkel said, delivering her core message.
EU Commission President Jose Manuel Barroso and Council President Herman van Rompuy also were eager to look ahead and at other G20 members and to present the EU as being willing and ready for action. "We correct our internal imbalances. We hope that other G20 members will correct their huge external imbalances," van Rompuy said, without naming China directly. Beijing is artificially keeping its currency undervalued and thereby contributing to its massive trade surplus.
Both Merkel and van Rompuy stressed that "structural reforms, budget consolidation, and growth impulses," were the three cornerstones on which the EU's approach to solving the current crisis was based. Worries that Angela Merkel would be isolated at the summit for her firm insistence on austerity proved unfounded at Los Cabos. The EU is speaking with one voice and is well aware of its importance for the world's economy. "We are the biggest economy and the biggest trade partner of the world," Barroso said. "And we are the biggest contributor to the IMF," he added, pointing out that it was therefore only logical that the IMF was involved in getting Greece back on track.
Democracy takes time
"Frankly, we are not coming here to receive lessons in terms of democracy or in terms of how to handle the economy," Barroso said. He also pointed out that "the crisis originated in North America and much of our financial sector was contaminated by, how can I put it, unorthodox practices, from some sectors of the financial market."
The next important step within the EU was the banking union, van Rompuy said. Yet changes towards a further economic and currency integration require changes to the EU treaties and will therefore take time. "Not all the members of the G20 are democracies, but we are democracies, and we take decisions democratically," he added. "Sometimes this means taking more time."
Brussels vs Berlin?
One crucial rift in the EU is the disagreement between Berlin and Brussels on the issue of the so-called eurobonds. While Angela Merkel remains opposed to such bonds that would be issued jointly by all eurozone countries and would therefore hold all countries liable, Barroso at Los Cabos dismissed the German opposition to the bonds, insisting they would not be a license for spending. The EU would have to drive further the architecture of its economic structures, align its financial structures with the political union, he said.
Van Rompuy however picked up some of Merkel's concerns, saying that eurobonds would only be possible once the EU had reached a higher level of financial and political integration. He was echoing comments by Merkel herself ahead of the summit: "In the eurozone we will have to move closer to each other. We have to build the foundation of the economic and currency union step-by-step. I expect a good G20 summit," she said.
Author: Mirjam Gehrke, Los Cabos /ai
Editor: Gregg Benzow
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