Harper heads to Europe for G20, G8 setup meetings

OTTAWA – Prime Minister Stephen Harper jets to Europe next week for separate meetings about the global fiscal crisis with the leaders of Great Britain and France.

Harper, British Prime Minister David Cameron and French President Nicolas Sarkozy will likely spend a significant amount of time discussing the crisis prompted by the near financial collapse of Greece. The country’s debt problems have prompted fears of another global credit squeeze.

The meetings will also be a chance for Harper to build some consensus on some policy objectives with two key European leaders ahead of next month’s G20 and G8 summits, which Canada is hosting in Toronto and in Huntsville, Ont., respectively.

"Both the United Kingdom and France are important members of the G8 and G20 and (Harper) intends to raise with both leaders his view that the G20 summit should focus on recovery from the global economic and financial crisis," Dimitri Soudas, Harper’s director of communications, told reporters Friday.

One key issue for the G20 summit to resolve is whether there should be some kind of levy applied globally to banks and financial services companies that could be used to pay for any future bank bailouts.

Sarkozy and Cameron favour this idea but Harper is vehemently opposed to it.

"There is general agreement with the principle that taxpayers should not bear the costs of rescuing the financial sector," said Soudas. "But there are obviously different opinions within the G20 on the issue of a bank tax or a levy. Countries have varied approaches for dealing with the cost of the financial crisis. As we’ve said all along, there is no one-size-fits-all solution."

Earlier this month, Harper sent a letter to all G20 leaders asking, when they come to Toronto at the end of June, they be prepared to commit to some benchmarks on the fiscal health of their national governments.

Harper, along with many other world leaders and central bankers, is worried that rising debt and deficits of some of the world’s largest economies will derail the global economic recovery.

"We now need to reassure markets not just that we’ve been prepared to intervene when we had to, but that governments can run responsible and sustainable balances over the long term," Harper wrote. "The levels of deficit and debt in many countries are reaching levels that markets judge to be unsustainable."

A senior Canadian government official involved in the discussions with other countries on the fiscal crisis said Harper’s letter appears to have struck the right note with G20 members.

"Certainly the feedback from finance deputy ministers and (G20) sherpas has been very positive on Prime Minister Harper’s letter," said the official. "The identification of the need to elaborate clear and more credible fiscal consolidation plans is increasingly recognized."

Sherpas are designated bureaucrats or emissaries who represent each G20 leader in talks leading up to the actual summit.

Harper will be the first foreign leader that Cameron will meet as prime minister, a role he took over on May 11 after his country’s May 6 general election. He leads a coalition government of Conservatives – Cameron’s party – and Liberal Democrats.

Harper has met Cameron before, as the leader of the British Parliament’s opposition.

World leaders, central bankers, and financial investors have been concerned about the fiscal probity of countries like Greece, Portugal, Ireland and Spain, but there are also concerns that giants like the U.S. and Japan must also provide credible assessments of their return to sustainable government fiscal policies.

"We can confront our fiscal challenge with clear and realistic plans for fiscal consolidation, or we can wait for markets to dictate the terms for us," Harper wrote.

Harper departs for Europe next Wednesday. He will meet Cameron on Thursday over lunch at 10 Downing Street and will meet Sarkozy the next day in Paris. He returns to Ottawa Friday evening.

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