Eurozone crisis a global risk

World economic leaders on Saturday turned their guns on the eurozone at a Davos forum, showing increasing frustration with the single-currency bloc's battle to cope with its debt crisis.

At the forefront of concerns were write-down talks in Greece, which dragged on into the weekend and now threaten to overshadow an EU summit today designed to present eurozone plans for escaping the debt trap.

Senior officials from outside the eurozone argued that Europe had not solved the more long-term problems undermining the euro, and that it had to move further and faster to integrate the bloc's economies.

"The fact that, at the start of 2012, we're still talking about Greece is a sign that this problem has not been dealt with," British Finance Minister George Osborne told senior finance officials.

"The danger here is that the tail wags the dog throughout this crisis - in other words, the inability to deal with the specific problems in the periphery causes shockwaves across the whole European economy and the world economy."

Canada's central bank chief, Mark Carney, who chairs the international bank regulator, the Financial Stability Board, said Europe's woes were holding back recovery and had cut global growth by 1% last year.

European and eurozone officials at the World Economic Forum, an annual get to-gether of the great and the good in global business and politics, have spent the week attempting to drum up optimism about the debt talks.

But, as the talking shop drew to an end, Greek leaders were still talking to private lenders about details of a plan to wipe à100-billion from their sovereign debt and avoid a messy default.

Private creditors said on Saturday that they were close to an agreement next week.

"Further progress was made on the understandings reached yesterday [Friday] on key legal and technical issues," they said after a two-hour meeting.

Athens was distracted by another dispute when European officials leaked the claim that Berlin wanted the European Commission to take full charge of the Greek budget and oversee its austerity strategy.

Greek officials reacted with fury at this attack on their sovereignty and Brussels was forced to concede that, though it would reinforce its "monitoring capacity", final fiscal responsibility would fall on Athens.

The drawn-out debt talks have undermined attempts to contain the crisis and shore up the bigger eurozone economies, to the frustration of leaders from the emerging economies and the rest of the developed world.

"You need decisive action. You need overkill. Confidence must come from decisive actions of governments," said Donald Tsang, chief executive of Hong Kong's autonomous regional administration.

"Two months ago in Greece you could make do with a 20% haircut; now even 50% is not enough; maybe 70% is needed. Do it quickly. You need resolution, decisiveness."

World Bank chief Robert Zoellick praised the European Central Bank for increasing liquidity for eurozone banks to enable them to buy more sovereign debt. But he warned this could only be a stop-gap.

"This buys time, but you still have to act," he said.

"No one is immune in the current situation.

"It's not just a eurozone crisis; it could spill over to the rest of the world," IMF director Christine Lagarde warned.