World Bank President Robert Zoellick said today that while the euro-area debt agreement “has bought some time,” Europe must solve the crisis by itself.
It would be a mistake “to assume somebody else is going to bail you out,” Zoellick said on a conference call with reporters before the Group of 20 nations summit in Cannes, France. Europe should not expect “a silver bullet from China” or look for developing countries to bear the primary burden of helping it emerge from its debt difficulties.
Zoellick’s remarks come ahead of the Nov. 3-4 meeting of the G-20. The top item for discussion is the effort to head off a threat of global recession, including the agreement reached by Europe’s leaders on a financial-rescue plan to resolve its sovereign-debt crisis.
The deal by European leaders “has bought some time,” though the challenge is how to use that time, and “there’s still much to do,” Zoellick said. “The markets are now looking for a sustained boost of confidence.”
Attention will also turn to how world leaders at the G-20 meeting can send a coordinated message of support, Zoellick said. Failure of a Greek referendum pledged by Prime Minister George Papandreou on the European Union’s rescue accord would be “a mess,” and “certainly makes the hill steeper for the G-20,” he said.
The G-20 needs to address the fallout from the euro zone, have an agenda to spur growth and accelerate jobs, and consider ways to use institutions like the World Bank and International Monetary Fund to provide support to developed countries that are facing a slowdown, Zoellick said. At the same time, the group must acknowledge a bigger role for developing nations that are a key source of global growth, he said.
“The world economy is still wobbly,” and “could tip very quickly” if the momentum isn’t maintained, he said.
-- Editors: Kevin Costelloe, Gail DeGeorge