Greece crisis tops G8 agenda

Francois Hollande, Barack Obama, Angela Merkel

World leaders were scheduled to huddle at Camp David yesterday with the focus on Greece as it stumbles toward an unprecedented eurozone exit that holds wildly uncertain repercussions for the global economy.
Leaders from the Group of Eight industrialised nations will gather at the history-imbued US presidential retreat near Washington for a two-day summit, with the dramatic denouement of Greece's economic crisis firmly at the top of the agenda.
The recent clobbering of Greek parties that back austerity measures under the country's 173-billion-euro ($220 billion) bailout has sparked a fresh round of market panic and left the two-year-old effort to prevent a Greek default on life support.
Governments in many G8 countries believe the odds of a chaos-inducing Greek default and exit from the euro have risen spectacularly since the polls.
Already, markets across the globe have been rocked by speculation that the crisis is slipping beyond control.
Fresh Greek polls are scheduled for June 17, but there is no certainty that supporters of the painful reforms will win, and already nervous Greeks have been pulling money from bank accounts.
While G8 governments are trying to frame the choice for Greek voters as starkly as possible, donors could yet face a tough choice: Acquiesce to Greek demands for some slack -- risking the ire of taxpayers -- or cut off funding to Athens, a move likely to trigger default and Greece's exit from the euro.
But elections France and Germany have shattered a long-standing consensus that spending cuts are the answer to Greece -- and Europe's -- woes leaving the G8 divided as the end game approaches.
Freshly elected French President Francois Hollande is sure to use his maiden G8 to press for pro-growth policies, and is likely to win the backing of most people around the table.
That puts German Chancellor Angela Merkel firmly in the hot seat. Merkel may even find herself arguing with her host, President Barack Obama.
Fearing the impact of European financial chaos on the United States as it approaches elections in November, Obama seems poised to wade into what has largely been a European debate.
At the summit, Obama will raise "specific" actions Europe could take, as the US welcomes the "debate in Europe about the imperative for jobs and growth," according to National Security Adviser Tom Donilon.
G8 leaders will hold their main discussions on Europe's fiscal plight Saturday at Camp David's rustic collection of cabins in the wooded Catoctin Mountain in Maryland, outside Washington.
On Friday night, discussions around the dinner table at Obama's Laurel Lodge will focus on Iran's nuclear challenge ahead of talks between global powers and the Islamic Republic in Baghdad later this month.
The leaders are also expected to address Syria's crackdown on its anti-government uprising, fears North Korea will launch a new nuclear test and Myanmar, after Obama eased US investment restrictions Thursday on the country formerly known as Burma.