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G8 summit: Euro crisis and possible 'Grexit' overshadow agenda

The G8 leaders hosted by Obama at Camp David have several global issues on their minds: Syria, nuclear proliferation, famine. But the eurozone debt crisis is once again the dominant concern.

By Staff writer / May 18, 2012

Oxfam activist wearing masks depicting G8 world leaders participate in a demonstration outside the White House in Washington, Thursday. President Obama will welcome G8 leaders to the presidential retreat in Camp David, Maryland.

Pablo Martinez Monsivais/AP

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Leaders from the world's largest advanced economies, the so-called Group of Eight (G8), meet Friday and Saturday with one big item pushing its way to the forefront: How to get Europe's debt crisis back under control.

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That's far from the only item on the agenda of the G8 summit, which is being hosted by President Obama at the presidential retreat in Camp David, Md. The leaders are also concerned about issues including the conflict in Syria and the threat of nuclear-weapons proliferation. They plan to talk about global efforts to guard against famine and malnutrition.

But the big and unavoidable issue is clear. Europe's sovereign debt crisis has flared anew since recent elections in Greece and France, sending negative financial ripples worldwide. Getting the eurozone back on track is Job No. 1.

Europe's austerity push, designed to address big budget deficits and a rising tide of public debts, has left the region in or near recession. Greece, with the biggest debt load, has seen a flight of bank deposits and a failure by newly elected lawmakers to form a unity government. As that nation prepares for new elections, the word "Grexit" has entered headlines as shorthand for the idea that Greece may soon exit the eurozone.

A sign of the global turmoil: A broad index of European stocks is down 15 percent in the past two months. Stocks have fallen a similar amount in emerging-market nations. America's Standard & Poor's 500 index is down about 8 percent. And a "flight to safety" by investors has buoyed the US dollar, US Treasury bonds, and German government bonds.

"The eurozone is at a crossroads. It either has to make up or it is looking at a potential breakup," British Prime Minister David Cameron, one of the G8 leaders, said in a speech Thursday. He said that without policies that lead toward both debt reduction and growth, the region is in uncharted territory, "which carries huge risks for everybody."

What can the G8 do? No grand plan is expected at the summit. But the weekend gathering is an important venue for the officials to prod, cajole, and seek a meeting of the minds. In attendance are three key euro zone leaders (from Germany, France, and Italy), plus leaders of the US, Britain, Canada, and Japan. President Vladimir Putin of Russia, the eighth G8 nation, is not attending.

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