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November 01, 2011

Greek Economy Dominates Cannes

by Lisa Bryant

President Nicolas Sarkozy of France is holding crisis talks Wednesday night with German and Greek leaders in Cannes, as heads of state begin arriving for the two-day summit of the Group of 20 leading economies.

Cannes is more used to hosting Tom Cruise than Jacob Zuma. But the President of South Africa counts among more than 30 leaders and top financial officials meeting here at the Group of 20 summit. Instead of the famous Cannes film festival, this agenda will be dominated by the latest twist in the European debt crisis, following Athens' call for a referendum on its bailout conditions.

Ahead of the summit, European Commission President Jose Manuel Barroso called on Greece to accept the terms of a European bailout fund.

"Without agreement of Greece to the program supported by the European Union and the IMF [International Monetary Fund], the conditions of Greek citizens will become much more painful, particularly for the most vulnerable," said Barroso.

John Kirton co-heads the G20 Research Group at the University of Toronto, in Canada.

"The Cannes summit has got to, for one, contain the euro crisis. Number two, find a way to generate strong, sustained, balanced growth in the global economy. Third, put in place stronger financial regulations and supervision… and then it has to move on to look at development," said Kirton.

There are fears the eurozone crisis will hijack the many other issues on the summit agenda. Thousands of international activists, with a range of causes, are staging protests in the nearby city of Nice to make sure world leaders focus on people and not just on financial markets.

John Ruthrauff, co-chair of the US nongovernmental umbrella group Interaction, said that includes tackling the fallout of the European crisis on developing countries.

"There's a huge amount of problems that can result in the European crises continuing in terms of remittances that are dropping, in terms of trade that's dropping - 60 percent of the banks in the South are European banks, so if they have trouble, that's going to be a problem," said Ruthrauff.

Summit host, French President Nicolas Sarkozy, has met with both NGOs [non-governmental organizations] and business leaders ahead of the summit. Among the proposals G20 leaders will discuss is a tax on financial transactions as a way to raise new funds for poorer countries. NGOs like Interaction support it. Business leaders like Standard Chartered Bank head Peter Sands - who is part of a spinoff business summit here - do not.

"At this juncture we need to be incredibly careful not to go too far and end up doing things that would undermine global growth and job creation, would fuel deleveraging and would in their way create new sources of instability," said Sands.

This normally glitzy town is all but deserted for the summit - except for the hordes of journalists, delegates and police. But real estate agent Fabienne Bohbot is among the few Cannes residents out people-watching.

Bohbot said things are bad economically. She said she hopes the G20 leaders will work at resolving the problems before they head home on Friday.