G-8 declares support for Greece, US president backs French attitude

CAMP DAVID - Reuters

Leaders of the G-8 nations watch the shootout of the Chelsea vs. Bayern Munich Champions League final during the G-8 Summit. REUTERS photo

World leaders backed keeping Greece in the eurozone over the weekend and vowed to take all steps necessary to combat financial turmoil while revitalizing a global economy increasingly threatened by Europe’s debt crisis.

A summit of the G-8 leading industrialized nations came down solidly in favor of a push to balance European austerity - an approach long driven by German Chancellor Angela Merkel - with a new dose of U.S.-style stimulus seen as vital to healing ailing eurozone economies. But it was clear that divisions remained.

“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,” the leaders said in a joint statement issued at their meeting at the Camp David presidential retreat in Maryland.

The overarching message from the summit hosted by President Barack Obama reflected his own concerns that the eurozone contagion, which threatens the future of Europe’s 17-country single currency bloc, could hurt the fragile U.S. recovery and his re-election chances in November.

With Greece’s political and economic upheaval high on the summit’s agenda and stoking concerns over instability in Spain and Italy, Group of Eight leaders sought to calm the situation. In the first line of their final economic communique, they essentially endorsed calls to broaden Europe’s focus beyond German-backed fiscal belt-tightening, calling it “our imperative” to promote growth and job creation. The G-8 said: “We reaffirm our interest in Greece remaining in the eurozone while respecting its commitments.” But leaders offered no specific prescription for extracting Athens from its worsening crisis.

Spain too has roiled markets by revealing huge bad loans in its banking system as it struggles to rein in its budget while facing recession.

Merkel, increasingly isolated by a French-led push for a more growth-oriented approach, sought to play down the differences, saying: “Solid finances and growth belong inseparably together and should not be put into contrast.”

Obama, who has pressed Europe for more growth-boosting measures like those he pursued at home, used his closing statement to remind eurozone leaders that the stakes were high and there could be “enormous” costs if they failed.

“Growth and jobs must be our top priority,” he said, reaffirming that Europe has the capacity to meet the challenge.