European Leaders Discuss Economic Crisis Ahead of Greek Vote

Posted June 14th, 2012 at 7:20 pm (UTC-5)
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French President Francois Hollande and Italian Prime Minister Mario Monti have agreed that budget discipline must not be allowed to hamper economic growth.

The two leaders met Thursday in Rome for talks ahead of national elections in Greece Sunday and a summit of 20 economic powers next week in Mexico. They called for a unified effort to take the euro zone out of the protracted crisis and boost market confidence.

Italian prime Minister Mario Monti reiterated European leaders' call for Greece to remain in the common currency zone. If parties opposed to austerity measures in exchange for international bailout prevail in Sunday's vote, Greece could revert to the use of its old currency, the drachma. Such a move could cause turmoil in international markets beyond Europe.

“We are three days from the Greek elections. We have talked about this also and I want to reaffirm my wish that Greece remains in Europe and respects its obligations.”

Mr. Hollande injected a positive note in his call for European unity and for greater efforts to shore up the common currency used in 17 European nations.

“So we need to declare loudly to create the cohesion that we need. I don't want a Europe seen as a sick continent. We have economic power, we are a group of countries with a great history. With all the conditions to assure our future. But we ourselves must make efforts. We don't have to be a factor of worry, but a source of pride.”

Mr. Hollande who took office last month disagrees with German Chancellor Angela Merkel on how to solve the continent's financial crisis. He says more emphasis should be put on creating jobs and spurring economy and less on austerity. Some economists agree that the tough debt-cutting measures are strangling some European economies, including Greece, Spain and Italy.

Chancellor Merkel is opposing solutions that would increase the cost for Germany, Europe's strongest economy and sought to make it clear ahead of the G-20 summit in Mexico.

In her address in German parliament Thursday, Ms Merkel warned that Germany's resources are not unlimited and that Europe cannot expect quick fixes for its core problems. She also said those who are calling on Germany to pour billions into eurobonds and common stability funds must focus first on fiscal discipline.

Greece's political parties failed to form a new coalition government after parliamentary elections last month, prompting the need for a repeat ballot. Greeks have held massive protests against the austerity measures imposed by international creditors and some say they are ready to revert to their old national currency.

Mr. Hollande defeated incumbent Nicolas Sarkozy, a close ally of Ms Merkel, in the runoff election last month. The Socialist leader is also expected to win a clear parliamentary majority in the Sunday election in France, which can make his position stronger.

Leaders of the group of 20 nations are meeting Tuesday and Wednesday in Los Cabos, Mexico. They are expected to press Europe to solve its debt crisis.