Oct. 27 (Bloomberg) -- Canadian Prime Minister Stephen Harper said today’s agreement by European leaders to tackle the debt crisis is “grounds for cautious optimism,” and urged them to work out details and implement the plan.
European leaders emerged from a summit meeting in Brussels today with a plan that will see bondholders take 50 percent losses on Greek debt and increase the firepower of the European rescue fund to 1 trillion euros ($1.4 trillion).
“These are steps in the right direction,” Harper, 52, said at a business conference in Perth, Australia, ahead of a meeting of leaders from Commonwealth nations, according to a prepared copy of his speech. “Of course, we still await the elaboration of further details and successful implementation.”
Harper, who heads the world’s 10th-largest economy and chaired a summit of leaders from the Group of 20 countries last year, said the European crisis is the biggest threat to the global recovery and that a solution needs to be large and decisive enough to persuade markets.
Harper said he’s optimistic European leaders have the will to make sacrifices needed to resolve the crisis.
“If the people of Europe are given a clear plan, a plan that will work, they will do what they must,” he said.
G-20 countries have other steps to take to secure the global recovery apart from the Europe crisis, Harper said, including pressing ahead with plans to reduce deficits over the “medium-term,” implement financial market reforms, promote free trade, and resolve global imbalances such as China’s large trade surpluses.
“It will not be indefinitely sustainable for an economy as large as China to run large surpluses with inflexible exchange rates,” he said. “The resulting deficits elsewhere lead to suboptimal policies and, if left unresolved, will eventually and inevitably lead to bad policies like protectionism.”
--Editors: Peter Hirschberg, John Brinsley
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