Leading economies told Europe it must put up extra money to fight its debt crisis if it wants more help from the rest of the world, piling pressure on Germany to drop its opposition to a bigger European bailout fund. Eurozone countries pledged on Sunday, at a meeting of finance leaders from the Group of 20 economic powers, to reassess next month the strength of their bailout fund.
This would be "essential input" when it comes for the G20 countries to consider putting more money into the International Monetary Fund's crisis war chest, G20 finance ministers and central bankers said in their final communiqué after two days of meetings here.
"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," US Treasury Secretary Timothy Geithner said. Germany, as Europe's largest economy, has sent conflicting signals over whether it is ready to soften its position, and it came under intense pressure this weekend to support enlarging the region's war chest.
It faces political hurdles at home. German lawmakers, who vote on Monday on a second Greek bailout package, have argued that imposing fiscal discipline on indebted countries is far more important to regaining the confidence of markets and reviving economic growth than bigger rescue funds. Geithner disagreed. While Europe's actions so far have reduced the risks of a "catastrophic" financial crisis, more must be done, he said.
British finance minister George Osborne was even sharper. "We have to see the colour of the Eurozone's money first - and, quite frankly, that hasn't happened. Until it does, there's no question of extra IMF money from Britain or probably anyone else," he said. The G20 is racing to line up massive international resources worth nearly $2 trillion - including existing and new funds - possibly by late April.
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