IMF leader: G20 must restore investor confidence
It's an idyllic place to thrash out the terrifyingly uncertain fate of Europe and the global economy.
Leaders of the world's largest economies began to assemble Sunday in this Baja California desert resort just as Greece's pro-bailout New Democracy party won the national elections, a vote for the financial status quo that could keep panic under control at least for now. A vote against the pro-bail-out party could have forced Greece to leave the joint euro currency, a move that would have had potentially catastrophic consequences for other ailing European nations and the global economy.
Still, Christine Lagarde, head of the International Monetary Fund, was grim-faced as she addressed the B-20 meeting of world business leaders running up to Monday's G20. She asked them to put their agenda aside to pressure world leaders to address the "mission-critical" priority of restoring investor confidence in the economy.
"Be as blunt as you can with the G20 leaders," she said. "Prioritize and indicate what in your view, in the view of the investors around the world ... is critical as far as you are concerned to restore confidence."
Largarde didn't take questions or comment on the projected winner of the Greek elections.
As central banks stood ready to intervene in case of financial turmoil, Greece held its second national election in just six weeks to select a new government after an inconclusive ballot on May 6. New Democracy leader Antonis Samaras proposed forming a pro-euro coalition government, adding, "the Greek people today voted for Greece to remain on its European path and in the eurozone."
But with the larger economies of Spain and Italy still in question, the heads of the world's 20 largest economies still face markets demanding swift, definitive action that will be extremely difficult, perhaps impossible, to deliver.
U.S. President Barack Obama, set to arrive Sunday night, and the summit's host, Mexican President Felipe Calderon, have been downplaying expectations.
Obama is seeking bolder, swifter signals from Europe that it will contain its financial mess and keep it from torpedoing the U.S. economy and his re-election chances along with it.
Calderon has given a more optimistic message, including that he expects the G20 to produce record donations to the International Monetary Fund, exceeding member states' pledges of $430 billion this year and bolstering its ability to conduct more bailouts in Europe.
There were, however, clear signs of deep divisions over this relatively straightforward measure. Calderon said the U.S. would decline to contribute, a decision in line with Washington's position that more IMF money would be a de-facto U.S. bailout of Europe. It was unclear how much money would come from emerging economies such as Brazil and India, which have been pushing for more say in the governance of the IMF in exchange for greater contribution.
The twin resort towns of Cabo San Lucas and San Jose del Cabo are ideal spots for Calderon's last moment in the international spotlight before July 1 presidential elections widely predicted to bring back the party that ruled Mexico with near-virtual control for seven decades before it was ousted from the country's highest office in 2000.
Recent months have been as bad as any for Mexico's battered international image, with scores of bodies dumped across the country by rival cartels, five journalists killed in the eastern state of Veracruz and a travel warning for Americans in a state on the Texas border to beware retaliation for a recent U.S. operation against the Zetas cartel.
"It's an issue that unfortunately puts Mexico on the world stage for the wrong reasons," Calderon told reporters Saturday.
But he also touted his record, saying Mexico had made fundamental changes for the better on questions of security, part of a legacy that also included improved health-care coverage, infrastructure and the hosting of a series of international events including a climate summit, a visit by the pope, and the G20.
Violence in Mexico had been dropping steadily when he took office in 2006 then spiked during his stepped up offensive on Mexico's drug cartels. Since then more than 47,000 people have died in drug-related violence.
Los Cabos is part of a small group of isolated coastal developments master-planned and developed on a massive scale by federal tourism officials to resemble U.S. suburban subdivisions more than they resemble the rest of Mexico, one reason Mexico's visitor numbers have remained surprisingly resilient despite the gruesome headlines.
"When I bring small kids I like to have all-inclusive, safe and protected, places," said Aaron Hendricks, a 42-year-old Salt Lake City mortgage banker walking past a strip-mall Starbucks to the beach with a body board and one of his six children, ages 5-17. "You can just leave them alone for a while and let them run around and play."