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Brazil ready to back crisis-hit Europe, differs on austerity

(BRUSSELS) - Brazilian President Dilma Rousseff pledged to stand by Europe in the eurozone debt crisis but warned against resorting to drastic austerity measures that stunt growth.

Brazil "is ready to take on its responsibility," Rousseff said after an EU-Brazil summit in Brussels. "You can rely and count on us."

But differing on the recipe for a turnaround, Rousseff said developed nations, which are slashing budgets to reduce huge debt burdens, instead should take measures to stimulate growth and reduce unemployment, and not focus solely on austerity programmes.

"The world today sees the current state of affairs in developed countries with great concern," she told a news conference.

The world has entered "stage two" of an economic crisis following the 2008 global financial turmoil, which led to bailouts of banks that increased the debts of developed nations, Rousseff said.

"We were not able to resume sustained growth and once again we face a recessive scenario marked by high unemployment and deterioration of historic social achievements," she said.

"History shows us that we will only be able to exit the crisis through stimuli to economic growth, coupled with macroeconomic stability policies as well as social policies aimed at creating jobs and income," she said.

"Simply adopting recessive adjustments is not enough."

Brazil has raised the possibility that the BRICS group of emerging powers -- of which it is part with Russia, India, China and South Africa -- could provide aid to the European Union.

As Rousseff made her plea for growth measures, EU finance ministers held talks in Luxembourg where Greece was pressured to take more austerity measures to cut its massive deficit and debt in return for bailout funds.

EU president Herman Van Rompuy sought to reassure Rousseff that Europe would take action to contain the debt crisis.

"I underlined to the president the European Union's determination to maintain the stability of the euro area and to stimulate structural economic growth and productivity," he said.

"The European Union will continue to act in a forceful way to address the current tensions in the sovereign debt market and to reinforce the foundations of the European monetary union on top of what we already decided."

The EU and Brazil will cooperate closely at a G20 summit in Cannes, France, next month, to prevent the global economy from falling back into recession, he said.

The EU and Brazilian leaders refused to take questions from reporters at the close of the summit.

EU relations with Brazil


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