At G-20’s closing, Obama prods Europe to boost growth

McClatchy NewspapersJune 19, 2012 

— President Barack Obama expressed confidence Tuesday that European leaders will act aggressively to boost growth in their countries and contain a crisis that threatens to slow the U.S. economy and imperil his chances of retaining the White House.

“What I’ve heard from European leaders is they understand the stakes, they understand why it’s important for them to take bold and decisive action, and I’m confident they can meet those tests,” Obama said at a press conference at the close of the two-day summit that was overshadowed by fears about Europe’s ability to contain the crisis.

Brief as the two-day summit was in the sunny resort town on Mexico’s Baja Peninsula, it was marked with foreign policy challenges for Obama, who increasingly has cited the turbulence in Europe as a drag on the U.S. economy.

Obama’s re-election is likely tied to how well voters believe he’s handling the economy. He’s dispatched officials to Europe to cajole leaders there into pursuing a fix broader than the belt-tightening measures that have caused angry voters to oust leaders in several countries.

Obama – who spent much of the day behind closed doors, meeting with his European counterparts and other leaders of the Group of 20 top economies – downplayed a suggestion that Europe’s failure to stem the crisis could affect his re-election in November, saying the U.S. economic recovery was a bigger concern.

“If we take the right policy steps, do the right thing, the politics will follow,” he said.

The Group of 20 gathering – which is likely the last foreign trip for Obama before the Nov. 6 election – also featured a tense tete-a-tete with Russian President Vladimir Putin, who has rejected U.S. pressure to aid in the ouster of Syrian leader Bashar Assad.

Syria was also on the table during a meeting with Chinese President Hu Jintao, who like Putin has rejected U.S. efforts to convince Assad to leave.

Obama acknowledged he hadn’t changed either leader’s stance.

“We had intensive conversations,” he said. “I don’t think it would be fair to say they are there yet, but I’m going to keep making the argument.”

Republicans have sought to make both issues relevant to the presidential campaign, criticizing Obama for not being tough enough on Russia and for prescribing what they say is the wrong solution to Europe’s fiscal woes.

An aide to presumptive Republican nominee Mitt Romney challenged the administration’s plans in an opinion piece in a German newspaper. Obama offered a mild rebuke, saying the campaign “may not be familiar with what our suggestions to Germany have been.”

And he added, “We have one president at a time and one administration at a time, and the traditional notion has been that America’s political differences end at the water’s edge.”

Obama administration officials had said they didn’t expect European Union leaders, who are scheduled to meet next week in Brussels, to make decisions about a rescue plan at the summit. But Treasury Under Secretary Lael Brainard told reporters Monday that the administration expected to see “a high degree of resolve to work together to address financial market tensions and more clarity about the need to strengthen demand.”

Obama spent about 45 minutes late Monday with German Chancellor Angela Merkel, whom the administration has pressed to embrace growth measures along with the belt-tightening remedy the Germans favor.

White House spokesman Jay Carney said Obama was encouraged by the meeting and that the two “agreed to work closely together . . . to build support for what needs to be done in Europe and the world to stabilize the situation, and support growth and jobs.”

Treasury Secretary Timothy Geithner said the Europeans were designing the “financial architecture” to secure their financial system, including seeing that especially hard-hit countries like Spain and Italy that are making long-term reforms can borrow at existing low interest rates.

“Those two things are very important,” he said. “Not just the long-term reforms to build a stronger Europe, but the immediate steps to make sure that they're stabilizing their financial systems and making sure these reforms can really work.”

And he said the Europeans have agreed to a focus on economic growth, “because of course, for these reforms to work in Europe over time, Europe needs to grow faster.”

Brainard said there had been a “noticeable shift in the European discussion recognizing the critical importance of supporting demand and job growth,” and she said the Europeans were looking at supporting project bonds and strengthening the European investment bank. Asked whether the shift included the German contingent, Brainard said it did.

“I think you’ll see it both in the documents and in their discussions,” she said.

Email: lclark@mcclatchydc.com; Twitter: @lesleyclark

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