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G-20 success depends on Europe

LOS CABOS, Mexico -- The leaders of the G-20 powers left their annual summit on Tuesday desperately hoping that Europe is ready to take the measures it needs to head off a catastrophic economic collapse.

Observers who came to Mexico for the get-together of the world's most powerful leaders were unanimous in warning that time is running out for European leaders to pull the eurozone single currency bloc back from the brink.

“The big story about Europe is that it's still on the brink of a systemic collapse. It's not functioning. The whole story is how do you not fall off the precipice,” said Yves Tiberghien, of the University of British Columbia.

“If there is an unwinding of the eurozone ... this would be the defining crisis of the entire century. It would be catastrophe. But to solve it is very difficult, because to solve it you have to build the missing institutions.

“To do this will take years, and so that's where the G-20 comes in. The Europeans basically need some time. You need to hold the markets off a bit. Anything to give them space,” the French political scientist warned.

European leaders returning from the G-20 will barely have time to digest the message of Los Cabos before they head to next week's European Council meeting in Brussels, where they will be expected to agree an action plan.

In Mexico, Europe's partners were clear on what that should entail: A unified system of banking regulation, pooled economic sovereignty and greater willingness from the European Central Bank to support struggling member states.

But many of these measures are anathema to European governments, especially Angela Merkel's conservative German administration, and some would imply changes to EU treaties or member states' constitutional rules.

But, as the leaders of Europe's international partners insistently warned, there is no time to waste.

“In some ways it was a G-20 summit, in some ways it was a preparatory meeting for the European summit,” said David Shorr, an American foreign policy expert from the Stanley Foundation, which studies global governance.

“The diplomacy here is leaders from outside Europe expressing their concerns about how the crisis could overspill onto them. The new IMF resources are a firebreak to protect them against that,” he said.

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