Sigh of relief at G20 summit over Greek election

LOS CABOS, Mexico (AP) ? Finger-length and emerald-green, the lawns of time-share condos and all-inclusive resorts seem to gleam in the bright sun as the surf rolls gently against the white-sand beaches of Los Cabos. Sometimes the only noise is the ruffling of palm fronds in the languid ocean breeze.

It's an idyllic place to thrash out the uncertain fate of Europe and the global economy.

There was some relief as leaders of the world's largest economies began to assemble Sunday in this Baja California desert resort when the Greece's pro-bailout New Democracy party won the national elections, a vote for the financial status quo that could keep panic under control at least for now.

It had been a tense couple of days for those attending events ahead of the G20 summit, which starts Monday afternoon. A vote against the pro-bailout party in the Greek election could have forced the country to leave the joint euro currency, a move that would have had potentially catastrophic consequences for other ailing European nations and the world.

"The Greek people have spoken," European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso said in a joint statement. "We salute the courage and resilience of the Greek citizens, fully aware of the sacrifices which are demanded from them to redress the Greek economy and build new, sustainable growth for the country."

As the pair indicated, the path ahead for Greece, and by extension the bigger economies of Italy and Spain, remains unclear and market turmoil could erupt again at virtually any time.

Before the latest Greek results came in, Christine Lagarde, head of the International Monetary Fund, was grim-faced as she addressed the B-20 meeting of world business leaders running up to the G20. She beseeched the businessmen to exert their influence and pressure world leaders to address the "mission-critical" priority of restoring investor confidence in the world economy.

"Be as blunt as you can with the G20 leaders," she said. "Prioritize and indicate what in your view, in the view of the investors around the world ... is critical as far as you are concerned to restore confidence."

The IMF issued a restrained but slightly more optimistic statement after the Greek vote.

"We take note of the election results in Greece and stand ready to engage with the new government on the way forward to help Greece achieve its objective of restoring financial stability, economic growth and jobs," the fund said through a spokesman.

Most European leaders were on the long flight to Los Cabos, or had put off their travel until the results were in. U.S. President Barack Obama, set to arrive Sunday night, and the summit's host, Mexican President Felipe Calderon, have been downplaying expectations for the summit

Obama is seeking bolder, swifter signals from Europe that it will contain its financial mess and keep it from torpedoing the U.S. economy and his re-election chances along with it.

Calderon has given a more optimistic message, including that he expects the G20 to produce record donations to the International Monetary Fund, exceeding member states' pledges of $430 billion this year and bolstering its ability to conduct more bailouts in Europe.

There were, however, clear signs of deep divisions over this relatively straightforward measure. Calderon said the U.S. would decline to contribute, a decision in line with Washington's position that more IMF money would be a de-facto U.S. bailout of Europe. It was unclear how much money would come from emerging economies such as Brazil and India, which have been pushing for more say in the governance of the IMF in exchange for greater contribution.

The twin resort towns of Cabo San Lucas and San Jose del Cabo are ideal spots for Calderon's last moment in the international spotlight before July 1 presidential elections widely predicted to bring back the party that ruled Mexico with near-virtual control for seven decades before it was ousted from the country's highest office in 2000.

Recent months have been as bad as any for Mexico's battered international image, with scores of bodies dumped across the country by rival cartels, five journalists killed in the eastern state of Veracruz and a travel warning for Americans in a state on the Texas border to beware retaliation for a recent U.S. operation against the Zetas cartel.

"It's an issue that unfortunately puts Mexico on the world stage for the wrong reasons," Calderon told reporters Saturday.

But he also touted his record, saying Mexico had made fundamental changes for the better on questions of security, part of a legacy that also included improved health care coverage, infrastructure and the hosting of a series of international events including a climate summit, a visit by the pope, and the G20.

Violence in Mexico had been dropping steadily when he took office in 2006 then spiked during his stepped up offensive on Mexico's drug cartels. Since then more than 47,000 people have died in drug-related violence.

Los Cabos is part of a small group of isolated coastal developments master-planned and developed on a massive scale by federal tourism officials to resemble U.S. suburban subdivisions more than they resemble the rest of Mexico, one reason Mexico's visitor numbers have remained surprisingly resilient despite the gruesome headlines.

"When I bring small kids I like to have all-inclusive, safe and protected, places," said Aaron Hendricks, a 42-year-old Salt Lake City mortgage banker walking past a strip-mall Starbucks to the beach with a body board and one of his six children, ages 5-17. "You can just leave them alone for a while and let them run around and play."

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Follow Michael Weissenstein on Twitter at www.twitter.com/mweissenstein

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