Europeans seek to reassure G8 summit on euro stability

Europeans seek to reassure G8 summit on euro stability

By Paul Ames

DEAUVILLE, France, May 26 (Xinhua) -- The European Unionstruggled Thursday to reassure G8 partners on the future of theeuro, insisting that every effort will be taken to avoid a defaultby Greece that could undermine the currency's viability.

"We will not let the euro fail," said Herman Van Rompuy,president of the European Council. "We will make every effort toavoid a (Greek) default or a credit event."

Economic issues dominated the first day of the G8 summit in thiswind-battered resort on the north-west coast of France.

Leaders also looked at Japan's efforts to rebuild its economyafter the earthquake and tsunami in March this year, and consideredthe role of the Internet and Green energy in stimulating economicgrowth.

Nuclear safety in the aftermath of the crisis provoked byradiation leaks from Japan's tsunami-damaged Fukushima power plantwas also high on the agenda.

French President Nicolas Sarkozy, who chaired the meeting, saidthere was broad agreement among the leaders to introduce tough newinternational safety standards.

"We all want to adopt very high level safety regulations thatwould apply to all nations that have civil nuclear power," Sarkozytold a news conference. "The safety level should be the highestever."

Japanese Prime Minister Naoto Kan offered to take a lead, workingwith the International Atomic Energy Agency.

On Friday, the leaders are expected to wrap up the summit byapproving a multibillion dollar funding package for Egypt andTunisia as part of broader support for democracy movements in theArab world.

Concerning has been mounting in recent weeks that despite a 110billion euro (156 billion U.S. dollars) bailout from the EuropeanUnion and International Monetary Fund last year, Greece will not beable to meet deadlines for paying back its debts and could be forcedto default, a scenario which many believe could have a catastrophicimpact on the euro.

That concern has led to the euro falling against other majorcurrencies. Officials at the G8 said the United States and Japan hadraised concerns that the eurozone's debt crisis could have anegative impact on the wider world economy.

Van Rompuy sought to calm those concerns insisting that EUheadquarters is confident that Greece will push through additionalausterity measures needed to get its deficit down and highlightingmore positive news from elsewhere in the euro-zone.

"The EU economy is firmly on the path to recovery," he said. "Ourmacroeconomic fundamentals are clearly better than those of otheradvanced economies."

Sarkozy also pointed at risks to the world economy elsewhere,speaking of the need to reduce "factors of tension and imbalance" anapparent reference to the U.S. deficit, rising commodity prices andthe strength of the Chinese currency. The French leader said hewould taking those issues to the summit of the G20 which he isscheduled to host in November.

Officials from several G8 nations stressed that this summit wasnot the occasion for picking a successor of scandal-hit IMF directorDominique Strauss-Kahn.

However on the sidelines of the meeting discussion was intenseover who should head the International Monetary Fund.

Sarkozy said there was broad support for French Finance MinisterChristine Lagarde to replace her compatriot Strauss-Kahn who isunder house arrest in New York on charges of sexually assaulting amaid in his hotel.

However leading emerging economies have argued the time has cometo end the arrangement under which a European takes the IMF top jobwhile American officials are appointed president of the World Bank.

"What I'm picking up is that everybody thinks Christine Lagardeis a woman of great qualities," Sarkozy said.

He hinted that, one day, the job could be offered to a non-European, but said now was not the moment to change, given the IMF'scurrent focus on the problems of the eurozone where Ireland andPortugal have followed Greece in the past few months in receiving EUand IMF bailouts.

"If you look at the monetary news at the moment, it's coming morefrom Europe than from the emerging economies .. so we think its agood idea that the head of the IMF at the moment should be aEuropean," he told a news conference.

Directors of several leading information technology companieswere invited to attend the G8 summit, following a separateconference in Paris that debated the future of the Internet and therole of government regulation in cyberspace.

They reported to the summit that regulation is needed, forexample to protect children or prevent copyright privacy, butstressed that it should be kept to a minimum to avoid stiflinginnovation in a sector which accounts for 6 percent of the globaleconomy.

The Internet is "one of the greatest forces for good" in theworld, said Eric Schmidt, executive chairman of Google. "We allbelieve that getting the governments to understand that is why weare here.'

Schmidt was joined at the G8 by Mark Zuckerberg, the founder ofFacebook, Maurice Levy of the French company Publicis, StephaneRichard of France Telecom and Hiroshi Mikitani from Japan's largestonline retailer, Rakuten.

They agreed that the so-called E-G8 summit of tech executivesshould become an annual event.