World Economy

Greece, Ukraine Crises Loom Over G7 Summit

Greece, Ukraine Crises Loom Over G7 Summit Greece, Ukraine Crises Loom Over G7 Summit

Leaders from the Group of Seven ( G7 ) industrial nations meet on Sunday in the Bavarian Alps for a summit overshadowed by Greece's debt crisis and ongoing violence in Ukraine.

The summit host, German Chancellor Angela Merkel, fought hard to try to seal a deal with the Greek government before the summit, but failed, ensuring US President Barack Obama will want an update on how close Europe is to ending an impasse that still hangs over the world economy, Yahoo News reported.

Obama had some sharp words for Russian President Vladimir Putin, who has been excluded for a third time from a meeting of what used to be the Group of Eight.

A key G7 issue would be "standing up to Russian aggression in Ukraine," Obama said ahead of their talks with Britain's David Cameron, France's Francois Hollande, Italy's Matteo Renzi, Canada's Stephen Harper and Japan's Shinzo Abe.

Benjamin Rhodes, a deputy national security adviser to Obama, said: “Most urgently, the focus is on maintaining the unity around the sanctions effort that has had very significant consequences on the Russian economy."

EU President Donald Tusk, also attending the meeting at the heavily guarded Elmau Castle retreat, said he wanted to "reconfirm G7 unity on sanctions policy" against Russia, after Abe and Harper made a point of visiting Kiev on their way to Germany to voice support for Ukraine's embattled leaders.

Obama, without naming crisis-hit Greece, also pointed at the European Union's ongoing troubles with debt-hit Athens, mentioning as the top summit issues "the global economy that creates jobs and opportunity" and "maintaining a strong and prosperous European Union".

Greece Debt Drama

Merkel – the eurozone's key champion of tough reforms and austerity in return for loans – had made a last-ditch effort to resolve the Greek crisis in the days before the G7 summit, huddling last Monday night with the heads of the EU executive, ECB and IMF in Berlin.

"It would be an absolute nightmare for her if Germany were portrayed as the chief culprit for a Greek bankruptcy, even an exit from the euro," commented newspaper Welt am Sonntag.

Yet the Greek drama threatened to overshadow the G7 summit, which Merkel has hoped to focus on other pressing global issues – from climate change to the role of women, public health initiatives and the fight against poverty.

Greece's radical-left government and its creditors have been locked in negotiations for five months in a bid to unlock 7.2 billion euros ($8 billion) in desperately-needed rescue funds.

The European Commission last week presented Greece with a five-page list of proposals, including sales tax hikes and cuts in civil servants' salaries and pensions.

Greek Prime Minister Alexis Tsipras rejected the demands as "absurd", while Athens withheld a 300-million-euro loan repayment to the IMF, opting instead to group four scheduled tranches into a single payment at the end of the month.

His Finance Minister Yanis Varoufakis told Proto Thema daily Sunday that the demands were "an aggressive move designed to terrorize the Greek government" and declared "this Greek government cannot be terrorized".

Greece's bailout agreement with its creditors expires at the end of June. Should Athens miss its loan payments and default, many fear this would set off a chain of events that could lead to a messy Greek exit from the euro.

A day after thousands protested against the G7 in largely peaceful rallies, a handful of protesters staged a sit-in Sunday to block the main access road to the castle, meaning journalists were transported by helicopter to the location.

The G7 statement is an important staging post before the UN climate change conference in Paris in December. It is a sign of how far world opinion has moved.