Sarkozy, Obama push for financial crisis solution

By Greg Keller

Associated Press

Published: Thursday, Nov. 3 2011 7:26 a.m. MDT

Argentina's President Cristina Fernandez de Kirchner, left, shakes hands with French President Nicolas Sarkozy during arrivals for a G20 summit in Cannes, France on Thursday, Nov. 3, 2011. French President Nicolas Sarkozy will welcome Barack Obama of the U.S., Hu Jintao of China as well as the leaders of India, Brazil, Russia and the other members of the Group of 20 leading world economies in the city made famous by its annual film festival, but the event is far from the star turn the unpopular French leader had hoped to make six months before he faces a tough re-election vote.

Markus Schreiber, Associated Press

CANNES, France — Europe's debt drama dominated talks among leaders of the Group of 20 leading economies Thursday, with Greece's government facing potential collapse and European leaders admitting that the eurozone may face losing its weakest member.

U.S. President Barack Obama, Chinese President Hu Jintao and other world leaders began the formal G-20 summit after a morning packed with bilateral meetings and a hurriedly organized meeting of eurozone officials to respond to developments in Greece — which risk fracturing Europe's common currency area and the EU itself.

President Barack Obama said the most important task at the G-20 summit is to resolve the European financial crisis and urged European Union leaders to flesh out details of their ambitious plan to rescue Greece and stabilize financial markets.

French President Nicolas Sarkozy scrambled to save the summit he's hosting from being hijacked by the tumult in Greece. Sarkozy said he and Obama agree the private sector should play a greater role in helping resolve the global financial crisis.

"We have found a common analysis to make the financial world contribute" to finding a solution to the crisis, Sarkozy told reporters after talks with the U.S. president. He said he welcomed Obama's "understanding on subjects such as a tax on financial transactions."

Sarkozy and some others in Europe have been pushing for a small tax on all financial transactions that could be used to help poor nations and reduce debts. The Obama administration and several leading economists are cool to the idea, favoring instead fees on the biggest banks.

Obama said he and Sarkozy discussed developments in Greece "and how we can work to help resolve that situation." Obama didn't give any details on what the U.S. might do in concert with its European allies.

"The United States will continue to be a partner with the Europeans to resolve these challenges," Obama said.

Sarkozy is also welcoming Hu Jintao of China as well as the leaders of India, Brazil, Russia and the other members of the G-20 in this city made famous by its annual film festival. But the event is far from the star turn the unpopular French leader had hoped to make six months before he faces a tough re-election vote.

European leaders held another round of emergency meetings Thursday morning about Greece, this time including officials from Spain and Italy — two major eurozone members whose debts have rattled markets and who are seen as too big for Europe to bail out. The meeting dragged on much longer than expected.

All attention is on Greece, where the embattled Socialist government was on the point of imploding Thursday as a revolt against Prime Minister George Papandreou's planned referendum on the country's hard-won international bailout package gathered pace.

Papandreou shocked European leaders and world markets with the announcement of the referendum. Sarkozy and German Chancellor Angela Merkel admitted in a late night press conference Thursday that they see the vote as a Greek choice between staying in the 17-member club of countries that use the euro or getting out.

A "no" vote could be devastating. It could lead to a disorderly Greek default, topple fragile European banks and send the global economy back into recession — and would threaten the cornerstone of European unity and decades of work toward integration on a continent wracked by centuries of war.

Sarkozy and other top EU officials have long held that it was unthinkable for Greece to quit the euro because it would be, Sarkozy has said, "a failure of Europe."

European leaders tried pocketbook pressure, saying they would not release €8 billion in previously approved loans to Greece — needed to pay government salaries and pensions — until the referendum results are in.

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