World leaders urge mix of economic growth, austerity for ailing Europe

May 19, 2012 

— President Barack Obama declared “genuine progress” Saturday at the close of a summit with world leaders, saying they had agreed Europe’s debt crisis needs a jolt of growth, along with tough financial restraints.

Standing at a small lectern in the sun-dappled driveway outside his cabin at the presidential retreat, where he had invited world leaders grappling with the crisis, Obama said the group had reached consensus on growth, which comes after rounds of belt tightening that have provoked electoral chaos.

“As all of the leaders here today agreed, growth and jobs must be our top priority,” Obama said. “A stable, growing economy is in everybody’s best interest, including America’s.”

The confab comes just six months before Obama stands for re-election – likely on his own stewardship of the U.S. economy – and he offered his record as a roadmap, saying his administration in its first days took “decisive steps to confront our own financial crisis.”

“We know it is possible, in part based on our own experience here,” he said, citing his administration’s choice to try to spur immediate growth through stimulus spending, impose financial reforms and seek to reduce the deficit over the longer term. The administration believes the spending staved off a worse recession and sparked growth, giving it room to tackle the deficit, and Obama touted job creation and surging exports.

“Manufacturers are investing in America again,” he declared.

“Of course we still have a lot of work to do,” he said, noting the U.S. unemployment rate and its deficit is still too high.

And Europe’s situation is “more complicated,” he acknowledged, with 17 governments involved, but he said that “the direction the debate has taken lately should give us confidence.”

“There's now an emerging consensus that more must be done to promote growth and job creation right now in the context of these fiscal and structural reforms,” he said.

Though Europe has pursued a strategy of strict belt-tightening, voter unrest evident in elections in France and Greece earlier this month has prompted a shift. Obama was to meet after his remarks with German Chancellor Angela Merkel, who has championed tough austerity measures for recovery.

But Obama was aided in his push to include growth measures by the new French president, Francois Hollande, who campaigned promising to make growth a priority. Hollande, who visited with Obama on Friday at the White House, sat next to Obama at the morning meeting on the economy – which went longer than scheduled because of the leaders’ “deep engagement,” White House officials said.

The meeting of the world’s richest democracies – the U.S., the United Kingdom, Canada, France, Germany, Italy, Japan and Russia – comes amid fears that Europe’s debt crisis could impair the U.S.’s slow recovery – and complicate Obama’s re-election effort. Russian President Vladimir Putin did not attend but sent Prime Minister Dmitry Medvedev in his stead.

The leaders issued a statement, noting that they “commit to take all necessary steps to strengthen and reinvigorate our economies and combat financial stresses, recognizing that the right measures are not the same for each of us.”

The leaders said the global economic recovery “shows signs of promise, but significant headwinds persist.”

Earlier, world leaders declared Iran’s nuclear ambitions of “grave concern” and pointedly warned Tehran of tough sanctions against its oil program if it can’t convince the world it’s not seeking to produce nuclear weapons.

The leaders said they “stand ready” to call on the International Energy Agency to ensure an adequate oil supply, given “increasing disruptions in the supply of oil to the global market over the past several months.”

The statement did not reference sanctions against Iranian oil, but it said that “looking ahead to the likelihood of further disruptions in oil sales,” the leaders were monitoring the situation and were prepared to ask the Paris-based agency – which coordinates the release of the Global Strategic Petroleum Reserve, the crude oil stockpiled by the countries – to “take appropriate action to ensure that the market is fully and timely supplied.”

Obama declared that Iran’s “continuing violations of international rules and norms and its inability thus far to convince the world community that it is not pursuing the weaponization of nuclear power is something of grave concern to all of us.”

He said leaders are hopeful about upcoming discussions in Baghdad, where the U.S. and five other countries have agreed to offer a proposal to Iran. But, he added, the countries are “firmly committed to continuing with the approach of sanctions and pressure.”

White House officials said they were uncertain if more details would emerge during European talks next week, but they said European officials were “seized with the importance, the timeliness of addressing the issue.”

White House officials characterized the group’s statement on Iran as “unusual” and said it was the first time the G-8 had issued such a proclamation. It comes as a European Union embargo on purchases of Iranian oil is scheduled to take effect on July 1. Michael Froman, deputy national security adviser for international affairs, said it sends a signal that the countries are “determined to implement the sanctions fully,” as well as assure global markets that oil reserves would be “fully and adequately supplied during this critical time.”

He said there was no trigger point yet on when the countries might look to release oil from their reserves.

Though gas prices have recently declined, high gasoline prices could be problematic for Obama in the run-up to the election, and tapping the reserve is likely to open Obama up to criticism that he’s seeking a fix to a political problem.

Froman said the move wouldn’t be “an issue of price management, but of supply.”

The G-8 summit comes at a critical time for Obama – six months before the election and amid a hornets nest of global problems that the leaders sought to address – from Iran, North Korea and Syria to global hunger.

The White House moved the event from a “cavernous convention center” in Chicago – where the NATO summit will open Sunday – to the seclusion of Camp David in hopes of promoting more conversation among the leaders, without scripted talking points or motorcades. And White House officials said it paid off, describing world leaders taking casual walks in the woods and engaging in “unscripted and unplanned” conversations on cabin patios.

White House officials said the leaders actually marked up and wrote some of the statement, rather than relying on the “sherpas” – as the staffers who pull together the events are called.

Obama got a chance to chat with British Prime Minister David Cameron while the two worked out on treadmills at the camp’s gym. Japanese Prime Minister Yoshihiko Noda was presented with a chocolate birthday cake on Friday and Obama and Merkel Saturday caught the overtime shootout of the Chelsea vs. Bayern Munich Champions League soccer match.

The room where the leaders met featured official White House photographs, including one that was likely hastily printed: a photograph of Obama and new French President Francois Hollande meeting for the first time Friday at the White House.

The participants dressed camp casual: Obama wore a dress shirt with the sleeves rolled up, his jacket slung on his chair. Other leaders were in V-neck sweaters or dress shirts without ties.

Despite the pastoral nature of the meeting, security remained world leader-tight. Marines repeatedly told reporters not to remove their cellphones from their pockets to photograph the presidential lodge.

“Everything for this family reunion was set up with military precision,” one pool report noted.

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