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WORLD> Europe
G8 leaders meet on economy, climate
(Agencies)
Updated: 2009-07-08 23:46

L'AQUILA, Italy: World leaders agreed that the global economy is too unstable to begin rolling back massive fiscal stimulus plans in the near future, according to a draft of the Group of Eight statement on the world economy obtained by The Associated Press.

The leaders, however, are committing to prepare exit strategies from the "unprecedented and concerted action" that has been taken. Germany, worried about running up cripping debt, has pressed for spending restraint, while other major economies like Britain, Japan and the United States can't rule out the need to pump in more money.

G8 leaders meet on economy, climate
From L-R: France's President Nicolas Sarkozy, Russia's President Dmitry Medvedev, Italy's Prime Minister Silvio Berlusconi and Japan's Prime Minister Taro Aso arrive for a family photograph at the G8 summit in L'Aquila July 8, 2009. [Agencies]

"We will take, individually and collectively, the necessary steps to return the global economy to a strong, stable and sustainable growth path," the draft communique said.

The measures include continuing their stimulus packages while keeping inflation under control, a particular German concern, while also ensuring that banks have enough cash to keep lending.

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In the meantime, the countries will prepare exit strategies, with the help of the International Monetary Fund, which will vary from country to country as the measures themselves have, the draft said.

The leaders gathered Wednesday in the quake-devastated central Italian city of L'Aquila, where they also wrestled over a potential landmark agreement on limiting the global rise in temperature. Over dinner later, they planned to turn their attention to world security issues from Iran to the Democratic People's Republic of Korea.

Italian host, Premier Silvio Berlusconi, welcomed the leaders, many of whom arrived at the summit in electric cars bearing their nation's flag. US President Barack Obama strolled into the summit site for the first G-8 meeting of his presidency.

The leaders may fall short on reaching a commitment to keep the globe's average temperature rise under 2 degrees Celsius (3.6 degrees Fahrenheit) in a bid to contain global warming. The United States, Japan, Canada and Russia -- half of the G8 -- have previously refused to back it, and the White House declined Wednesday to comment if it had signed off on a statement citing the temperature threshold.

US backing for the deal would mark an abrupt turnaround from the Bush administration's stand and be a strong gesture to developing nations.

European Commission President Jose Manuel Barroso told reporters that he hoped that the leaders could agree to the specific limit on the rise in temperature.

"We are not yet there where we would like to be but I think things are shaping in the right direction for Copenhagen," Barroso said, referring to the next meeting of a key international summit to replace the Kyoto protocol in December.

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