Prime Minister Stephen Harper is urging the euro zone to move quickly toward deeper integration as concern mounts over growing sovereign debt and banking sector troubles in Spain.
In an interview with the CBC's Peter Mansbridge, Mr. Harper says time is running out for European leaders to act and that changes must go beyond the incremental measures that have allowed the financial crisis to remain unresolved for nearly four consecutive years.
"I do think in a sense, here, I don't want to sound too alarmist, but we are kind of running out of runway here. And in terms of structure of the euro zone and in terms of addressing these problems, we do need to see a broader game plan," Mr. Harper said in an interview that was taped in London Tuesday for The National.
The next meeting of G20 leaders is just two weeks away and the summit in Los Cabos, Mexico is shaping up as a form of deadline for concrete proposals on how to avoid the risk of another global financial crisis possibly triggered by the failure of individual European states or financial institutions.
The run up to the G20 comes as officials in Spain warn its banking system may need outside help.
The G20 leaders will meet just days after the June 17 Greek election, where a decision by voters to embrace anti-austerity parties could hasten Greece's exit from the euro zone.
Mr. Harper, who is scheduled to meet with French President François Hollande in Paris Thursday, said structural changes to the euro zone are urgently needed regardless of what Greek voters decide.
"We just can't say, 'Let's wait until the Greek election.' We cannot have a Greek election determining the future of the global economy. That's not fair to anybody," he said.
While Mr. Harper did not lay out detailed recommendations as to what Europe should do, he did say there is a need for deeper financial integration among the member states.
"I think what has to happen is there has to be a serious examination of the shortcomings of the Euro structure," he said. "Euro central institutions, whether it be fiscal policy, monetary policy, financial regulation, are simply not as robust as they are in a currency that has a national government behind it. And for whatever reasons those things weren't felt necessary when the Euro was conceived. But in a time of crisis to sustain the Euro they have to do a much bigger job of integration than they have done until this point. The Euro in its present form will change."
When Canada chaired the June 2010 G20 meetings in Toronto, Mr. Harper successfully urged the group of nations to commit to halve deficits by 2013 and stabilize debt-to-GDP levels by 2016. A progress report last fall suggested the G20 was generally on track toward meeting that goal.
However the tone of the public debate in Europe has shifted of late, largely driven by the election of political leaders like France's Mr. Hollande who say government policy should be focused on "growth."
Mr. Harper insists its possible for nations to focus on austerity and growth at the same time.
"If you take those two phrases and say by fiscal discipline you mean cutting, and by growth you mean spending, then yes they are incompatible. But I don't think it's that simple of [an] equation," he said. "I do think that all economies need a sense of fiscal discipline especially over the midterm and if you are in the middle of a debt crisis you can't borrow your way out of a debt crisis. That's logically impossible. But at the same time you do need, as we are doing in Canada, you need to undertake a range of measures, not just fiscal discipline, to ensure growth."
Mr. Harper also admitted that he continues to be concerned about fallout for the Canadian economy.
"Look ... ever since mid '08 I have been constantly worried. We remind Canadians of two things constantly: that Canada is doing better, much better, and our mid-to long-term fundamentals are much sounder than virtually the rest of the developed world. At the same time, we are in a global economy that has been recovering and that recovery is very fragile. I keep saying that. I think sometimes people think when you say things often enough, it's just a mantra. It's not just a mantra."
Editor's note: An earlier version of this story misstated the date of Prime Minister Stephen Harper's meeting with French President François Hollande. This version has been corrected.