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Prime Minister Stephen Harper holds a press conference in Paris, France on Thursday, June 7, 2012. (Sean Kilpatrick/THE CANADIAN PRESS)
Prime Minister Stephen Harper holds a press conference in Paris, France on Thursday, June 7, 2012. (Sean Kilpatrick/THE CANADIAN PRESS)

Harper’s refusal to help bail out Europe draws Germany’s ire Add to ...

Germany is expressing its irritation with Canada for refusing to contribute to an international bailout fund as Prime Minister Stephen Harper faces increased pressure from the G20 to show “solidarity” with countries tackling Europe’s financial crisis.

Canada is on track to be one of the few G20 nations not offering a specific amount to the International Monetary Fund as it tries to raise at least $430-billion to draw on in case any members need a financial rescue.

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But Mr. Harper isn’t budging as he carves out an agenda directly opposite to those of the high-debt governments of Europe. He chose Davos earlier this year to announce a long-term economic plan that includes raising the eligibility age for Old Age Security, partly to contrast Canada with the generous but unaffordable entitlement programs that are partly to blame for the trouble in Europe.

Ottawa insists the IMF exists to help the world’s developing countries, not Europe, and Canada takes the position that it is standing up for non-G20 countries that are uncomfortable with IMF funds going to the euro zone.

The Prime Minister’s stand isn’t likely to make him popular at this month’s G20 summit in Los Cabos, where the Mexican hosts are making the collection of new contributions a key priority for the meeting. The G20 leaders meet on June 18, just one day after an election in Greece that will have important consequences for the stability of the European Union.

The European economy is in a particularly sensitive phase due to both the uncertainty surrounding Greece’s future and rising concern over the health of Spain’s banking system.

Almost all G20 members – with the exception of Canada and the United States – have said they will announce specific pledges in Los Cabos, and some amounts have been reported already. Japan, for instance, is expected to offer $60-billion, Saudi Arabia $15-billion and Australia $7-billion.

Germany, the strongest economy in the EU, is expressing concern over Canada’s repeated assertions that its taxpayers should not “bail out” Europe.

In an interview with The Globe and Mail, Germany’s ambassador to Canada, Georg Witschel, said Canada should realize that the entire global economy will be at risk if the European economy falters.

“We find it indeed somewhat irritating and somewhat disappointing that Canada is so adamantly refusing to help,” he said. “A major problem in the euro zone would have major negative economic repercussions on Canada, so solidarity is needed. … We still hope that Canada would be ready to contribute more, like so many other partners.”

Yet this pressure on Canada appears to be having no effect. Finance Minister Jim Flaherty used strong language in Ottawa on Thursday to dismiss calls from NDP Leader Thomas Mulcair for Canada to contribute.

“What we do know is that Mr. Mulcair criticizes our government for not participating with Canadian taxpayers’ money in bailing out European banks and, quite frankly, these are among the wealthiest countries in the world and they can manage their own issue before looking to other countries to bail them out,” Mr. Flaherty said.

Conservative MP Pierre Poilievre put it another way in the House of Commons.

“This Prime Minister will not force hard-working Canadian taxpayers to bail out sumptuous euro welfare-state countries and the wealthy bankers that lend to them,” he said.

The political heat in Ottawa over the global economy comes as Mr. Harper is making headlines in Europe with his calls for deeper integration of financial bodies within the EU.

“Europe is one of the wealthiest parts of the planet. We would hope that it doesn’t get to the stage where the rest of the world has to rescue Europe,” he told the Financial Times in an interview this week in London. On Thursday, he met with François Hollande, France’s new Socialist President, who was elected on promises of a “growth” agenda, in contrast to the austerity measures of his predecessor, Nicolas Sarkozy.

Mr. Sarkozy’s departure from the EU leadership group led to widespread commentary that German Chancellor Angela Merkel is now isolated in her calls for fiscal restraint. However, Germany this week welcomed Mr. Harper’s comments that it is possible to have both growth and fiscal discipline.

Germany’s ambassador, Dr. Witschel, said the Prime Minister’s comment that any growth agenda should not be financed by more debt was “most welcome.”

Mr. Hollande provided an example of France’s new direction this week when he lowered the retirement age for some workers to 60 from 62, reversing a decision of the Sarkozy government.

Mr. Harper played down the change on Thursday, arguing that France’s policies are similar to Canada’s flexible rules for early access to the Canada Pension Plan.

It was the second meeting between Mr. Harper and Mr. Hollande. They met last month at the G8 gathering at Camp David in the United States. The Conservative and the Socialist might presumably be at odds on economics, but Mr. Harper spoke glowingly of the new President.

“I’m very impressed,” Mr. Harper said in French. “He is a very prudent man. … He has made a complete analysis of the challenges in [France] and in Europe in general and I am very impressed.”

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