From The Guardian UK: http://www.guardian.co.uk/business/2012/jun/16/world-bank-euro-collapse-crisis
Europe 'facing Lehmans moment' says outgoing head Robert Zoellick as Greeks are warned over key election
The outgoing head of the World Bank,
Robert Zoellick, will warn the G20 summit that Europe runs the risk of
sparking a Lehman-style global crisis that will have dire consequences
for developing nations.
As Greek voters go to the polls in elections that could determine the future of the eurozone, Zoellick told the Observer he was advising emerging nations to ready themselves for the consequences of events in the single-currency area.
The election of an anti-austerity government would spark the most serious crisis for the euro
so far, following the apparent failure of a Spanish bank bailout last
week. German chancellor Angela Merkel yesterday ruled out renegotiating Greece's
bailout, saying the country must stick to its deals with international
lenders.
Unofficial polls suggest the conservative New Democracy party
is ahead of the anti-austerity Syriza by four percentage points — though
as much as 15% of the electorate remains undecided.
As all eyes
focus on Athens, Zoellick said: "Europe may be able to muddle through
but the risk is rising." He added: "There could be a Lehmans moment if
things are not properly handled." The bankruptcy of Lehman Brothers in September 2008 proved to be the trigger for the deepest slump in the global economy
since the 1930s, and Zoellick said developing countries needed to
"prepare for the uncertainty coming out of the eurozone and the wider
financial markets". He added: "It will be better if they can avoid
piling up short-term debts that can come due in volatile periods and
look to the fundamentals of future growth – infrastructure and human
capital."
Zoellick, whose five years at the bank has coincided
with the financial and economic crisis, retires at the end of the month.
Fearing that Europe's sovereign debt problems could have spillover
effects, he said the bank had been increasing its lending to support
Bulgaria's banking system and acting to prevent a credit crunch in
south-east Europe. Steps were also being taken to protect countries in
north Africa that were vulnerable to Europe's debt crisis and trade
finance facilities were being strengthened for francophone west Africa.
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