The West

Germany must lead: World Bank
Germany must lead: World Bank

Germany has "no choice" but to lead Europe out of its debt crisis, lending its clout in support of struggling countries' crucial reforms, World Bank president Robert Zoellick says.

Zoellick said the financial turmoil threatening to break up the eurozone was made worse by the failure of European leaders to get control of the contagion.

"We could debate what are the exact elements that need to go into preserving Europe. I think that the Germans ... are right about the need to get the fiscal consolidation and structural reforms," Zoellick said at a Washington think tank event on Thursday.

While saying that only the Europeans could make such decisions, Zoellick, a former US diplomat and trade official, acknowledged the sticky situation of Germany, Europe's biggest economy, in pushing austerity measures to fight the debt crisis.

"History has given Germany a role that isn't easy because of ... Germany's reluctance to be seen as sort of throwing its weight around," he said.

"But I think the reality is: there's no choice."

Zoellick held out hope for a way to safeguard the 17-nation eurozone, which is riven by political differences over austerity and stimulus measures to hold the currency bloc together.

"There still is a potential solution set. But it requires taking steps that don't just give money away, but that would show countries such as Spain and Italy that if they undertake these serious reforms that they will be backed and supported," he said.

Zoellick said Europe's responses "have sort of dribbled out in a way that has lost the benefit of getting ahead of the problem".

"The process of, sort of 'a day late and a euro short' unfortunately just adds to the problem."

At issue is "kind of a challenging question of political economy strategy. And that's I think what we're still going to be seeing tested over the next couple of weeks".

The West Australian

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