BY RUISHA QIAN
ANCHOR ERICA COGHILL
At Saturday’s G20 meeting in Paris, world leaders are set to wrestle about whether to boost IMF’s aid in the European debt crisis. The Economic Times explains one side of the debate.
“Brazil, Russia, India and China are working on ways to contribute money rapidly to expand the effective funds of the International Monetary Fund... to increase the role of emerging economic nations in combating the eurozone sovereign debt crisis.”
The plan would give the IMF roughly $750 billion in normal lending capacity.
Bloomberg, quoting a Hong Kong-based strategist, says more involvement in funding could give emerging countries more say in the euro crisis.
“Emerging markets, in particular China, may feel the pressure at this point to make some gestures to help the West. They do not want to invest too much given that the West’s problems are of its own making, and if they help, they want to do so in a way that brings them benefits and recognition.”
The plan has been shot down by the US, UK, and Canada.
In an interview with CNBC, US Treasury Secretary Tim Geithner says Europe should be able to take care of itself.
“Of course Europe, as a whole, has very substantial resources available to help manage the problem. The financial problem that faces Europe is complicated to solve, but they are well within the resources that Europe has available.”
And the Financial Times explains why the U.K. isn’t fond of the idea of more IMF aid, either.
“The emerging economies’ offer put the UK in a particularly difficult position because David Cameron, prime minister, called this week for a much bigger “bazooka” to prevent contagion spreading from Greece, through Spain and Italy to the rest of the world economy, but does not want to commit UK funds to the effort.”
Despite the wrangling between developed and developing countries, the Wall Street Journal says ultimately, the plan is likely to encounter legal difficulties.
“Even if the G-20 backs the idea, however, doubling the IMF's resources requires legislative approval, a political hurdle that could stymie efforts in some countries. Some lawmakers in the U.S. Congress, for example, have discussed de-funding existing commitments to the IMF. Asking Congress for additional funding would be a major obstacle.”
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• European Parliament, Strasbourg, 13 June 2012
• Speaker: Nigel Farage MEP, Leader of the UK Independence Party (UKIP), Co-President of the 'Europe of Freedom and Democracy' (EFD) Group in the European Parliament - http://nigelfaragemep.co.uk
• Joint debate: European Council meeting - Multiannual financial framework and own resources
A. Preparation for the European Council meeting (28-29 June 2012)
Council and Commission statements
B. Multiannual financial framework and own resources
Council and Commission statements
"Another one bites the dust. Country number four, Spain, gets bailed out and we all of course know that it won't be the last. Though I wondered over the weekend whether perhaps I was missing something, because when the Spanish prime minister Mr Rajoy got up, he said that this bailout shows what a success the eurozone has been.
And I thought, well, having listened to him over the previous couple of weeks telling us that there would not be a bailout, I got the feeling after all his twists and turns he's just about the most incompetent leader in the whole of Europe, and that's saying something, because there is pretty stiff competition.
Indeed, every single prediction of yours, Mr Barroso, has been wrong, and dear old Herman Van Rompuy, well he's done a runner hasn't he. Because the last time he was here, he told us we had turned the corner, that the euro crisis was over and he hasn't bothered to come back and see us.
I remember being here ten years ago, hearing the launch of the Lisbon Agenda. We were told that with the euro, by 2010 we would have full employment and indeed that Europe would be the competitive and dynamic powerhouse of the world. By any objective criteria the Euro has failed, and in fact there is a looming, impending disaster.
You know, this deal makes things worse not better. A hundred billion [euro] is put up for the Spanish banking system, and 20 per cent of that money has to come from Italy. And under the deal the Italians have to lend to the Spanish banks at 3 per cent but to get that money they have to borrow on the markets at 7 per cent. It's genius isn't it. It really is brilliant.
So what we are doing with this package is we are actually driving countries like Italy towards needing to be bailed out themselves.
In addition to that, we put a further 10 per cent on Spanish national debt and I tell you, any banking analyst will tell you, 100 billion does not solve the Spanish banking problem, it would need to be more like 400 billion.
And with Greece teetering on the edge of Euro withdrawal, the real elephant in the room is that once Greece leaves, the ECB, the European Central Bank is bust. It's gone.
It has 444 billion euros worth of exposure to the bailed-out countries and to rectify that you'll need to have a cash call from Ireland, Spain, Portugal, Greece and Italy. You couldn't make it up could you! It is total and utter failure. This ship, the euro Titanic has now hit the iceberg and sadly there simply aren't enough life boats."
• Video: EbS (European Parliament)
• End music: Velvet Choker - Corner Stone Cues
• EU Member States:
Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Germany, Denmark, Estonia, Spain, Finland, France, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Sweden, United Kingdom