President Lee Myung-bak and Australian Prime Minister Julia Gillard urged Europe to demonstrate its commitment to stabilizing banks and seeking fiscal consolidation to resolve the debt crisis rocking the 17-member single currency zone.
The two leaders issued the appeal in a joint article published Thursday in the Australian Financial Review ahead of next week's summit of the Group of 20 major economies in Mexico, saying "resolute action" is needed to address the uncertainty confronting the global economy.
"We need a clear message from Europe that it is taking decisive steps to stabilize and strengthen its banks," they said in the article. "A crucial element of restoring confidence in Europe is agreement on a roadmap for the eurozone to underpin its monetary union by a fiscal union and a banking union."
The eurozone debt crisis is expected to dominate the G20 summit as it comes about a week after Spain announced plans to seek a bailout, the fourth nation in the 17-member zone to do so, and a day after Greece holds a crucial election that may result in the country's exit from the euro.
Lee and Gillard welcomed Spain's decision to seek financial assistance, saying Europe should move quickly to ensure that its banks are "adequately capitalized and backstopped" because the health of the banking sector is key to economic growth and reducing some of the risks preoccupying markets.
"Europe must have credible fiscal consolidation plans to restore fiscal sustainability, but it is also essential that it has a strategy for growth that includes policies aimed at boosting investment, freeing up product and labor markets, deregulating business, promoting competition and building skills," they said.
Such reforms, including deeper institutional integration, will be politically difficult and it will take time to see their full benefits, but "setting a clear pathway will underpin public confidence in the sustainability of European growth and cooperation," they said.
The leaders urged G20 members to demonstrate an action-backed commitment to seeking policies for strong, sustainable and balanced growth. They also called for an "unambiguous message from world leaders to resisting protectionism and opening trade and investment."
They also said the upcoming G20 forum should make progress in the process of reforming the International Monetary Fund, including increasing IMF resources by more than US$430 billion, and ensuring the agency's governance structure reflects "the shifts in economic influence."
"Economic growth and new jobs are crucial to improving people's livelihoods both now and for future generations," they said. "The reforms to secure these objectives are not easy and change will not happen overnight, but the world is expecting the G20 to deliver," they said. (Yonhap)