Draft communique: G-20 leaders have produced coordinated plan for global job creation

By Associated Press, Updated: Monday, June 18, 9:45 PM

LOS CABOS, Mexico — The leaders of the world’s largest economies have agreed to step up their efforts to boost growth and job creation, which they call the top priority in fighting the effects of the European economic crisis, according to a draft of the statement to be released Tuesday at the end of the Group of 20 annual meeting.

The draft obtained by The Associated Press on Monday places the G-20 on the side of those who have been arguing for a focus on job creation, including through government spending, instead of the budget cutbacks and austerity pushed most notably by German Chancellor Angela Merkel.

Germany feels that it been unfairly burdened by its large contributions to international bailouts of economically weaker European countries that overspent for years and, in exchange, it has been insisting on steep cutbacks from aid recipients such as Greece. Those cutbacks have led to dramatic economic hardship for voters in Greece and other countries. A growing number of European countries having been advocating spending and growth, not austerity, and the G-20 statement appears to place the group of the world’s largest economies into that camp.

“We are united in our resolve to promote growth and jobs,” the draft says, declaring that the leaders will announce the “coordinated Los Cabos Growth and Jobs Action Plan” to achieve those goals, although the draft does not provide details of the plan.

It throws its support specifically behind greater government spending as a response to a worsening global economy, saying that countries with the resources “stand ready” to take fiscal action.

The plan says the Obama administration pledged to prevent sharp tax increases and government spending cuts from kicking in at the end of the year, as scheduled under current law, to avoid sending the U.S. into another recession.

As G20 officials wrangled over last-minute changes in the wording of the statement, European leaders at the summit struggled to reassure the world Monday that they were on the path to solving their continent’s relentless economic crisis, defending the pace of their response even as market pressures pushed Spain closer to needing a bailout that would strain the world’s ability to pay.

Less than 24 hours after an election that eased fears of a Greek exit from the shared euro currency, the interest rate that Spain pays on its debt surged above the 7-percent level that had forced Greece, Portugal and Ireland to seek international help.

The prospect of a bailout for Spain’s €1.1 trillion ($1.39 trillion) economy immediately eclipsed the good feeling at the G-20 from the election, and it dwarfed the host country Mexico’s expressions of confidence that the meeting of the world’s largest economies would lead to more than $430 billion in concrete commitment for the International Monetary Fund as insurance against future bailouts.

The Spanish delegation to the G-20 bemoaned the rise in the country’s borrowing costs and said the market reaction didn’t correspond to the reality of Spain’s economic strength.

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