G20 refuses greater global resources for settling Europe’s debt problem

Europe’s campaigning for securing funds for Greek bailout from the rest of the world has got a set back as the G20 meeting asked Europe to construct a bigger firewall on its own. Over the last few weeks, Europe was making efforts to secure money from the G20 countries through the IMF route.

Before the Mexico City meeting of the G20, many countries especially from the emerging world were passive to the EU efforts. At the same time, many of them were critical of the EU method of exerting additional pressure on IMF for sorting out the debt problem.

In the G20 meeting, the European efforts got a setback mainly because of the rather surprising opposition from the US.  The US argued that Europe itself should build a bigger bailout contribution and thus a sizable firewall, before inviting contribution from the rest of the world.

US Treasury Secretary Timothy Geithner observed that “There is broad agreement that the IMF cannot substitute for the absence of a stronger European firewall and the IMF cannot move forward without more clarity on Europe’s own plans,”

The G20 has suggested Europe to come with a clear plan as well as a strong effort of its own.  Lack of internal consensus was strongly visible in the European Union. It was divided on the scale of efforts it should make even before the beginning of the G20 meeting. Germany refused to contribute sizably to the Greek bail out. The German opposition to enhance the size of the European bailout fund has given a message that Europe is trying to transfer the burden the bailout to the rest of the world.