As world leaders gathered for the G8 summit at Camp David, the US presidential countryside retreat, they were all smiles for the cameras. But there were tensions behind the lens.
The people of Greece are being forced to pay off crippling debts to German and French banks.
But an election earlier this month saw huge votes for parties that reject austerity—raising the prospect of a Greek exit from the euro.
Most G8 leaders want Germany to ease the eurozone crisis by agreeing to partially take on the debts of weaker countries such as Greece.
This could mean issuing so-called “eurobonds”—debt that would be available to all European countries but backed by the central bank and so ultimately by Germany.
Germany’s ruling class, however, is less keen on this idea. The German delegation lobbied hard to downplay references to the euro crisis in the final summit declaration.
The declaration they ended up issuing is a strange document. On the one hand it says the G8’s imperative is “to promote growth and jobs”.
But on the other hand it remains committed to austerity measures, or “fiscal responsibility” as the G8 likes to call it.
This reflects splits among world leaders. Some, such as David Cameron and Germany’s Angela Merkel, want to press ahead with cuts to lower government debt.
Others, such as US president Barack Obama and France’s new president Francois Hollande, worry that austerity is highly unpopular—and could make the crisis worse.
Hollande was elected on a wave of opposition to the austerity pushed by Nicolas Sarkozy, his predecessor as president. Obama also faces a battle to be re-elected US president later this year.
More fundamentally it is the actions of ordinary people in Greece that have terrified the G8 leaders. Mass protests in the streets have now spilled over into mass votes for left parties opposed to austerity.
Yet the policies touted by Obama and Hollande as an “alternative” to austerity do not amount to much.
There is much fancy talk of “growth” and “investment”. But the reality is that they only stand for slower and shallower cuts.
The real alternative is to force the rich to pay for the crisis that they created. And the drive for that political alternative comes from the streets, not the summits.
Back story: the G8
- The G8 is the Group of 8—the leaders of eight of the world’s largest economies
- Leaders gathered from France, Germany, Italy, Japan, Britain, the US, Canada and Russia
- Together these countries produce around 60 percent of the world’s total GDP production—and have up to 99 percent of its nuclear weapons
- Formally G8 decisions are made by issuing lengthy communiques. But the real talks happen in the margins