The G20 Summit being held here has suddenly acquired a new meaning with Greece staging an unexpected coup in the past couple of days, hijacking the heads of governments of 20 developed and emerging economies to sort out a very local and dirty financial mess of its own making rather than attend to the world’s long-term economic fundamentals.
For the record, Greece is not a member of the G20, but, right now, the G in G20 is all about Greece.
The crisis of governance in the once-upon-a-time global civilisation with a capital G has eclipsed the Summit. The drama now squarely rests on how Greece, and eventually Europe, resolves the emergent debt crisis.
With speculation sweeping across the Continent on Greece’s future political course, European leaders got busy looking out for fire tenders and clutching at every straw in the wind to save the Union from a collapse, even as the global financial market came under threat, in turn, injecting more uncertainty into a volatile equation.
[Greece’s teetering government backed away from the proposed referendum on staying in the euro on Thursday, Reuters reported from Athens, while European leaders talked for the first time of a possible Greek exit to preserve the single currency. Markets rallied in feverish trading as the likelihood grew that Greece would not hold the referendum. The European Central Bank also provided a surprise boost by cutting interest rates by 25 points to 1.25 per cent.]
Opinion makers, of whom there is no shortage at this point of time on the beaches of the Cote d’Azur, say the crisis is already threatening to drag a heavily indebted Italy into a debt crisis and the EU might be powerless to reverse that situation.
Caught in this high drama, Prime Minister Manmohan Singh, who came to Cannes with very good intentions, had to bear the postponement of his 40-minute tête-à-tête with President Nicolas Sarkozy on Thursday. He nevertheless brought a voice of sanity, articulating that Europe resolve its issues without provoking a global bloodbath. He also advised European leaders to heed the voice of reason.
Dr Singh said the euro zone countries have the principal responsibility of dealing with these problems and the dangers from spillover from the euro zone was a matter of concern to the rest of the world.
This probably means that the European Central Bank (ECB) should first pour in funds to save Greece and the Union. International help, whether by way of dole from China, or the international community, should be tapped next.