As economic turmoil in Europe threatens to plunge the world into another financial crisis, the Group of 20 (G20) meets for a two-day summit in Mexico to discuss ways to stabilize the global economy.
The leaders of the world's 20 largest economies are meeting in Los Cabos, Mexico, on Monday, where they will discuss ways to stabilize the global economy as Europe's debt crisis threatens to spill beyond its borders.
US President Barack Obama is scheduled to meet personally with leaders of the European Union on the sidelines of the summit.
With the US presidential election approaching in November, the Obama administration is concerned that economic turmoil in Europe could drag the US back into recession, thereby jeopardizing the president's re-election prospects.
German Chancellor Angela Merkel is likely to face pressure from both Obama and French President Francois Hollande to embrace economic stimulus measures.
So far, Merkel has steadfastly defended Berlin's insistence on budget austerity as the way out of the debt crisis. But Hollande comes to the G20 summit with a strengthened hand at the negotiating table, after his Socialist Party scored a decisive victory in France's parliamentary runoff on Sunday.
European growth pact
Shorty after arriving in Mexico, Merkel rejected the idea of relaxing Greece's bailout conditions, despite conservative Greek leader Antonis Samaras' suggestion that he would seek to re-negotiate certain aspects of the deal.
Although Europe and much of the world welcomed Samaras' defeat of his anti-austerity opponents in Greek elections on Sunday, the markets continued to grumble. The yield on Spanish bonds hit an unsustainable seven percent on Monday, which could force Madrid to seek a bailout over the long run.
The German chancellor attempted to dispel rumors of European disunity, saying that the EU would represent a united front at the G20 summit. Merkel also indicated that Europe was working on a growth package.
"We as Europeans will make clear in a common effort that we are tackling the growth problems in Europe decisively through a mixture of structural reforms, fiscal consolidation and stimulus for growth," Merkel said.
'World in deep trouble'
The emerging economies in the so-called BRICS bloc - Brazil, Russia, India, China and South Africa - also met in preparation for the G20 summit.
China's deputy finance minister, Zhu Guangyao, predicted that the group would pledge at least $60 billion (47 billion euros) to help the International Monetary Fund (IMF) boost its global financial firewall.
"China is confident that the IMF will realize its $430 billion and China will pitch in," Zhu told reporters as the national delegations arrived in Mexico.
In April, the G20 promised to provide the IMF with an additional $430 billion in funding.
Summit host and Mexican President Felipe Calderon had said on Saturday that he doesn't expect the US to contribute to this re-capitalization. Many in Washington believe that contributing money to the IMF would amount to a US bailout for Europe.
Indian Prime Minister Manmohan Singh, meanwhile, called on the G20 members to turn words into deeds in order to bring the world back from the brink of another major financial crisis.
"The world is in deep trouble," Singh said. "I hope the G20 will come up with constructive proposals to get the world out of this crisis."
slk/tm (AP, AFP, dpa)