G20 leaders agree to boost the resources of the IMF, but fail to agree on how to pull the eurozone back from the brink, as the Greek prime minister faces a crucial vote.
The plight of Greece and Italy was top of the agenda at the Cannes summit, and the leaders of the world’s 20 richest nations failed to agree on the details.
Prime Minister David Cameron said Britain had agreed to contribute financially to a stronger IMF. But he denied this money would be used to increase the strength of the eurozone bailout fund that has been used to help Ireland, Portugal and Greece.
“Britain will not contribute to the eurozone bailout fund and we are clear that the IMF will not contribute to the euro bailout fund either. Global action cannot be a substitute for concerted action by the eurozone to stand behind their currency.”
The IMF will not contribute to the euro bailout fund. Prime Minister David Cameron
Italy said it was willing to allow the EU and IMF to monitor the progress it was making to reduce its debts.
Greek Prime Minister George Papandreou’s future will be settled by a confidence vote in parliament late on Friday night. If he loses, elections are likely – along with weeks of political turmoil, during which Greece’s membership of the euro will come under further threat.
If he wins, Mr Papandreou has pledged to step aside, according to Greek government sources – making way for an interim, national unity government that would stick to the bailout plan agreed with the EU and IMF.
Before the summit opened today, there was speculation that the IMF’s war chest could be boosted by up to $350bn (£220bn). But no figure was agreed.
Mr Cameron denied he and other world leaders had failed to reach a deal. “The problem is not that there isn’t a deal.The problem is that not all of the detail, not all the specifics, all of the action has been put in place.”
The Prime Minister added: “Let me be clear. This in not about the IMF putting money into a eurozone bailout fund.This is not right. We wouldn’t support that.That is not going to happen.
“In terms of the interests of British taxpayers, I have protected the interests of British taxpayers by keeping us out of some euro bailout into Greece, by getting us out of euro bailout funds arranged through the European Union completely from 2013.I had to negotiate very hard to get that.”
When your PM comes away from a summit intended to sort out problems talking about "contingency planning" for some kind of eurozone disaster, you get the impression things didn't go too well. Read more from Political Editor Gary Gibbon.
Earlier, Chancellor George Osborne said Italy’s debts were causing concern. “One of the problems we’ve got at the moment is the situation with the Italian bonds – in other words, the cost that Italy is paying for its own debt.
“That’s one of the problems. We’ve also got problems with Spain and problems that everyone is following in Greece. These are all part of the same issue, which is the stability of the euro.”
The German political establishment sees Silvio Berlusconi as a catastrophic menace and perhaps the biggest single obstacle to world economic stability, writes Political Editor Gary Gibbon
Italy has said it is willing to allow the EU and IMF to monitor what it is doing to reduce its debts. Prime Minister Silvio Berlusconi, whose government is close to collapse, agreed to allow monitoring after talks with eurozone leaders and President Barack Obama.
“We need to make sure there is credibility with Italy’s targets, that it is going to meet them,” an EU source told Reuters. “We decided to have the IMF involved on the monitoring, using their own methodology, and the Italians say they can live with that.”
EU President Herman von Rompuy described the talks with Italy as “serene” and “not a diktat”.
With Britain willing to contribute financially to increase the firepower of the IMF, the Chancellor said the government was not going “out on a limb”, but was acting in concert with other countries.
Mr Papandreou dropped his plan to hold a referendum on the bailout deal Greece has struck with the EU and IMF after France and Germany warned him that they would consider it a plebiscite on whether Athens wanted to remain a member of the euro.
Mr Osborne said Greece’s possible exit from the single currency was not likely “at the moment”, but he warned that leaving the euro “would be a pretty traumatic event with all sorts of consequences and frankly some of those consequences are unpredictable at this point”.