ASUNCION (Reuters) - Spain and Portugal said on Saturday the euro zone’s debt crisis is a global problem, calling on the United States and other G20 powers to help contain the fallout.
Spanish Prime Minister Jose Luis Rodriguez Zapatero urged the G20 countries least affected by the crisis to provide “urgent stimulus plans” to shield the global economy.
Europe’s debt crisis looks set to dominate the summit of Group of 20 leading economies in France from November 3-4.
The gathering in Cannes will take place a week after euro zone leaders reached a deal to recapitalize their banks, boost the firepower of a euro zone rescue fund and impose hefty losses on holders of Greek debt.
“We hope these deals, together with those made by the G20 next weekend ... restore the confidence needed to keep the economy moving,” Zapatero told leaders at the Ibero-American summit in Paraguay.
“I hope they will rise to the challenge next week. The United States has a role, the Federal Reserve has a role, all the central banks of big countries have their role — of course, China, India, Brazil, the Europeans and Japan,” he said during a news conference.
“The G20’s response has two key elements. Firstly, those of us who have been working to consolidate our fiscal position cannot change course. But those countries that have the margin to incentivize economic activity have to adopt urgent stimulus plans. If not, the global economy will be affected.”
In the last 18 months, Zapatero has made cuts and implemented reforms to show Spain is serious about fiscal discipline and to avoid a sell-off in its debt on concerns it would need a Greek-style bailout.
Portuguese Prime Minister Pedro Passos Coelho told leaders gathered in Asuncion the “crisis was not just European.”
“This is a global crisis,” said. “It’s a crisis that calls on all of us, whether in Europe, in Latin America or any other continent.”
A source from the Portuguese delegation said Passos Coelho asked Mexican President Felipe Calderon to tell fellow G20 members that Washington should help resolve the crisis “by boosting trade and also with financial help.”
“The European Union has already responded to the crisis. It hopes to find in the G20 setting a global response to a crisis that is systemic and global,” the source added, speaking on condition of anonymity.
Financial markets rallied strongly this week after European leaders hammered out the crisis deal, although analysts quickly warned that details of the rescue could still take weeks or even months to work out.