Europe and the G-20 leading economies must act decisively and quickly to avoid another full-scale world recession, Canadian Prime Minister Stephen Harper warned Thursday.
Writing on the eve of a meeting in Paris of G-20 finance ministers and central bank governors, Harper said each missed opportunity to contain the European debt crisis was growing more and more costly.
"We cannot afford any more missed opportunities," Harper said in an op-ed piece in Toronto's Globe and Mail.
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"The good news is that this crisis can still be contained and reversed. The bad news is that, unless decisive action is urgently taken, our nations will once again be forced to respond to a full-blown global recession, albeit this time without the full arsenal of policy weapons at our disposal."
Harper hosted last year's Toronto G-20 summit which committed members to deficit reduction, and he has grown increasingly impatient with the slowness in confronting the current financial and economic crisis.
His prescription for Europe is:
• Immediately and decisively "overwhelm" the sovereign debt and banking system issues
• Carry out commitments to increase the flexibility of the European Financial Stability Fund as quickly as possible
• Implement clear and credible deficit reduction plans
Harper called on the G-20 to develop the planned global framework for sustainable growth, which will seek more consumption in surplus countries and deficit reduction in others.
In addition, he said the G-20 should:
• Develop clear and concrete medium-term debt and deficit reduction plans as agreed in Toronto in 2010
• Take meaningful action to increase exchange-rate flexibility — a reference to China and other emerging Asian countries
• Unequivocally commit to implement quickly and fully the financial sector reforms agreed in previous summits
• Resist protectionism and advance multilateral trade
The Oct. 13-14 Paris talks are a prelude for a G-20 summit that Harper will join next month in Cannes, France.
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