Act quickly on debt crisis, Australia PM tells Europe

PERTH, Australia — Australia, host of a Commonwealth leaders summit, called on Tuesday for Europe to act decisively this week, when EU finance ministers meet, to end its debt crisis and avoid contagion. "It's time for Europe to respond. We acknowledge the steps Europe has taken and how painful they have been," Australian Prime Minister Julia Gillard said in a speech opening a pre-summit business forum in Perth in west Australia. "But much more needs to be done, and needs to be done fast. European leaders will need to stabilize the situation by resolving sovereign debt issues and ensure there are adequate safeguards to avoid contagion," said Gillard. "All of us as Commonwealth member nations stand to suffer if the correct response is not forthcoming. This is no time for delay," she said, adding "this is the message I will take to the G20 summit in Cannes in nine days". Europe's debt crisis is set to be a major issue at the Commonwealth Heads of Government Meeting (CHOGM), which will be attended by Britain's Prime Minister David Cameron. The summit will be opened by Queen Elizabeth on Friday. The 54-member Commonwealth includes five G20 nations, Britain, Canada, Australia, India and South Africa, and is home to an estimated two billion people and some of the world's fastest-growing developing economies. EU finance ministers are due to meet on Wednesday, ahead of a leaders meeting later in the day, in an attempt to finalize a plan to fight the euro zone's sovereign debt crisis. Europe is nearing agreement on bank recapitalization and on how to leverage a rescue fund to try to stop bond market contagion, but sharp differences remain over the size of losses private holders of Greek government bonds will have to accept. Gillard called on Europe to ensure its private banks were adequately capitalized to ensure stability and growth and for less emphasis on exotic financial products. As the "political weight of our world shifts from West to East," Gillard said, large emerging economies like China should also rebalance their economies to encourage domestic growth and market-driven interest and exchange rates, and avoid protectionism. "Like 2008, we face a moment of choice that requires absolute clarity of thought and action to keep the global economy from slipping backwards into a new crisis," said Gillard. "G20 leaders will need to strike the right balance between addressing short-term risks and pledging reforms that promote growth into the future," she said. An activist group that sparked the Occupy Wall Street movement has called for global protests on Saturday to demand G20 leaders impose a "Robin Hood" tax on financial transactions and currency trades. Thousands turned out for a global day of protests on Oct. 15, which were mostly peaceful apart from in Rome, where there were riots. — Reuters