Emerging giants pressure EU, China dangles $100bn

Emerging giants pressured EU countries at the G20 on Thursday to solve their debt crisis, with Beijing dangling $100 billion in rescue funds if the eurozone guarantees its bailout plan will work. Leaders of Brazil, Russia, India, China and South Africa sat down together hours ahead of the official opening of the summit where they "discussed the European debt crisis," said Russian President Dmitry Medvedev. Kremlin economic advisor Arkady Dvorkovich added that the leaders agreed that they would "work out a common position of BRICS member states on the eurozone." Individually, the emerging giant leaders also warned their EU counterparts that they had to steer the continent out of the crisis to avoid dragging the world economy into a new recession. Chinese President Hu Jintao told his French counterpart Nicolas Sarkozy that Europe had primary responsibility for resolving the debt crisis, while signalling that he had confidence that it has "all the wisdom and capability" to fix the problem. Beijing also said it could provide up to $100 billion (73 billion euros) in support for the eurozone, a member of the Chinese central bank's monetary policy committee said in an interview Thursday. If certain conditions are met "one could think that an amount around 100 billion dollars is not inconceivable," Li Daokui said in an interview in the French daily Le Figaro. The European Union has been looking eagerly to China's war chest of $3.2 trillion in foreign exchange reserves which it hopes could help bankroll the expansion of its bailout fund to one trillion euros to contain its debt crisis. The head of the European Financial Stability Facility, Klaus Regling, travelled to Beijing last Friday for talks about a possible contribution, but China has so far made no firm commitment to provide financial assistance. But Li stressed that "China is ready to help Europe, it is clear, but there are at least two preliminary conditions" to fulfill. Beijing wants certainty that the EFSF package works. In addition, China wants to know what sort of guarantees would be offered if the bailout fails. Brazil said earlier that it would not purchase European bonds but would provide help via an IMF-administered fund. Separately, Argentinian President Cristina Kirchner slammed the current system of "anarchic financial capitalism." She said: "What I propose is to return to real capitalism... because what we are experiencing now is not capitalism, it is anarchic financial capitalism where nobody has any control." EU leaders thought that they put the Greek debt crisis to bed with a rescue plan on October 27. But Greece shocked the markets with an announcement that it would put the package to a referendum. While departing for Cannes, India's Prime Minister Manmohan Singh issued a strong statement, saying that "much more needs to be done" to restore investors' confidence in the eurozone. "The twin summits of the European Union and eurozone a few days ago have helped to restore a measure of confidence in the markets, but much more needs to be done," Singh said. "It is imperative the difficult decisions needed to address the economic challenges in Europe and elsewhere are taken swiftly," the Indian prime minister said.