The G8 negotiations at Camp David ended Saturday with the newly elected French president, François Hollande, turning the tide against austerity pushed by Germany's Angela Merkel. However, the concluding statement issued by the G8 has contradictory calls for both austerity measures and growth as a way out of the debt crisis.
Clashing with advice of well-respected economists such as Paul Krugman, British Prime Minister told reporters: "There is no conflict between austerity and growth. You need to have a strong deficit reduction program in order to get growth."
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RT has video on the G8 summit:
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“An alliance for growth” was French daily newspaper Le Monde's depiction of the historic first meeting between new president François Hollande and his American counterpart Barack Obama.
Echoed by many other French media outlets, Le Monde's Saturday edition headline reflected the gaining momentum of Hollande‘s call to move away from austerity in tackling the ever-worsening eurozone crisis.
He was buoyed by the backing he received from Obama calling for a "strong growth agenda in Europe" as the two heads of state met for the first time at the White House on Friday.
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Barack Obama and the other G8 leaders wrapped up their negotiations on the European crisis at Camp David on Saturday with a pledge to keep Greece in the eurozone and to promote growth.
The communique, which had the growth promise at the top, represents a victory for Obama and the new French president, François Hollande, over German chancellor, Angela Merkel, who has resisted calls for a stimulus package.
But it may be shortlived. The communique was short in detail and Merkel could re-establish her dominance next week at an informal European meeting.
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The White House: Camp David Declaration (portion of text)
Camp David, Maryland, United States
May 18-19, 2012
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1. We, the Leaders of the Group of Eight, met at Camp David on May 18 and 19, 2012 to address major global economic and political challenges.
The Global Economy
2. Our imperative is to promote growth and jobs.
3. The global economic recovery shows signs of promise, but significant headwinds persist.
4. Against this background, we commit to take all necessary steps to strengthen and reinvigorate our economies and combat financial stresses, recognizing that the right measures are not the same for each of us.
5. We welcome the ongoing discussion in Europe on how to generate growth, while maintaining a firm commitment to implement fiscal consolidation to be assessed on a structural basis. We agree on the importance of a strong and cohesive Eurozone for global stability and recovery, and we affirm our interest in Greece remaining in the Eurozone while respecting its commitments. We all have an interest in the success of specific measures to strengthen the resilience of the Eurozone and growth in Europe. We support Euro Area Leaders’ resolve to address the strains in the Eurozone in a credible and timely manner and in a manner that fosters confidence, stability and growth.
6. We agree that all of our governments need to take actions to boost confidence and nurture recovery including reforms to raise productivity, growth and demand within a sustainable, credible and non-inflationary macroeconomic framework. We commit to fiscal responsibility and, in this context, we support sound and sustainable fiscal consolidation policies that take into account countries’ evolving economic conditions and underpin confidence and economic recovery.
7. To raise productivity and growth potential in our economies, we support structural reforms, and investments in education and in modern infrastructure, as appropriate. Investment initiatives can be financed using a range of mechanisms, including leveraging the private sector. Sound financial measures, to which we are committed, should build stronger systems over time while not choking off near-term credit growth. We commit to promote investment to underpin demand, including support for small businesses and public-private partnerships.
8. Robust international trade, investment and market integration are key drivers of strong sustainable and balanced growth. We underscore the importance of open markets and a fair, strong, rules-based trading system. We will honor our commitment to refrain from protectionist measures, protect investments and pursue bilateral, plurilateral, and multilateral efforts, consistent with and supportive of the WTO framework, to reduce barriers to trade and investment and maintain open markets. We call on the broader international community to do likewise. Recognizing that unnecessary differences and overly burdensome regulatory standards serve as significant barriers to trade, we support efforts towards regulatory coherence and better alignment of standards to further promote trade and growth.
9. Given the importance of intellectual property rights (IPR) to stimulating job and economic growth, we affirm the significance of high standards for IPR protection and enforcement, including through international legal instruments and mutual assistance agreements, as well as through government procurement processes, private-sector voluntary codes of best practices, and enhanced customs cooperation, while promoting the free flow of information. To protect public health and consumer safety, we also commit to exchange information on rogue internet pharmacy sites in accordance with national law and share best practices on combating counterfeit medical products.
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Public spending is under assault from the United States to Europe in the name of fighting deficits. Nobel Prize-winning economist Paul Krugman argues in his new book, "End This Depression Now!", that the hysteria over the deficit will constrain an economic recovery in a time of high unemployment and stagnating wages. "The economics is really easy," says Krugman, "If we were to spend more money at the government level and ... rehire the schoolteachers, firefighters, police officers who have been laid off in the last several years because of cutbacks at the state and local level, we would be a long way back towards full employment. ... Right now, there just is not enough spending, and we need the government, which can do it, to step in and provide the demand we need. ... We’ve had austerity in the face of a recession, in a way that we have never had before since the 1930s. ... And the results are clear: it’s disastrous."
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