President Barack Obama – whose re-election might hinge as much on Europe as it does on such domestic political battlegrounds as Florida and North Carolina – will head to a global summit Sunday that’s unlikely to settle the overseas debt crisis.
Obama, who’s increasingly cited Europe’s troubles as a drag on the U.S. economy, will play cajoler in chief at the Group of 20 nations gathering Monday in Los Cabos, Mexico. He’ll urge European officials to adopt aggressive measures to solve their debt woes and prevent them from spilling across borders. U.S. officials, though, expect only words of confidence, not detailed plans; European leaders will save that for their own meeting in Brussels in late June.
The trip comes after a bad stretch for Obama on the domestic front, with a worse-than-expected May jobs report upsetting financial markets and raising questions about the strength of the economy.
As Republicans in Congress have stymied the president’s job-creation efforts, he’s similarly constrained in Europe, where the Obama administration has largely offered advice and counsel from the sidelines, believing that Europe can and should solve its own problems.
“Obama’s big weakness in the election is the U.S. economy, and it’s hurting him a lot,” said Gary Clyde Hufbauer, a senior fellow at the Peterson Institute for International Economics. “With no legislation that he can get through Congress, the best he can do is to remove some of the jitters that are slowing down the economy, but Europe has yet to cooperate.”
Obama has sought to show in the past week that his administration is deeply engaged, saying that it’s been in “constant contact” with European leaders.
At the same time, Treasury Secretary Tim Geithner said he and his counterparts wanted to see how much progress the European Union was making toward a regionwide deposit insurance system to prevent bank runs, and how close the EU was to centralized bank supervision.
"They recognize they’re going to have to do a bit more," Geithner said, adding that he doesn’t think that EU members will allow the decades-long integration of Europe to fall apart. "My view is they considered this very carefully and they’ve decided it’s in their interest to hold it together, and what they say to us privately is that they will do whatever is necessary to hold it together."
A slowdown in the U.S. economy – caused by Europe or not – poses a threat to Obama’s re-election prospects. Recent polls suggest that the president and presumptive Republican nominee Mitt Romney are in a tight race over who’d best handle the economy, and Obama sought last week to explain that some factors are outside his control.
“Europe is our largest economic trading partner,” he said. “If there’s less demand for our products in places like Paris or Madrid it could mean less business for manufacturers in places like Pittsburgh or Milwaukee.”
It’s unclear how closely U.S. voters are paying attention and whether they’ll take it into account when they’re assigning blame for the dour U.S. economy.
A national poll released Tuesday found that just 18 percent of respondents were following news about the European economy “very closely,” while 35 percent said they were very closely tracking the U.S. economy. The same poll in late May by the Pew Research Center’s weekly News Interest Index found that nearly four times as many respondents cited the death of football player Junior Seau as their top story as the number who named Europe’s economic problems.
“This is not registering,” said Carroll Doherty, an associate director at the Pew Research Center for the People & the Press, which measures perceptions of economic news and opinions about the national economy. “At this stage, the public is not viewing what’s going on in Europe as something that they necessarily need to worry about.”
The poll found last December that 75 percent said the size of the national debt posed a major threat to the U.S. economy, while less than 46 percent cited Europe as a threat.
Foreign policy has been a strong suit for Obama, and the Republicans see potential political advantage in the situation. A senior adviser to Romney criticized Obama in a German newspaper opinion piece over the weekend, saying his administration’s advice to Germany was “not only unwise” but that it “reveals ignorance of the causes of the crisis and of a growth trend in the future.”
The article by R. Glenn Hubbard, published in the German business journal Handelsblatt, drew a sharp complaint from the Obama campaign, which accused the Republican campaign of looking to “undermine America’s foreign policy abroad.”
The G-20 session will open a day after Greek voters choose between candidates who support European austerity measures and candidates whose opposition to them could lead to Greece deciding to exit the 17-nation eurozone.
Obama made a rare presidential appeal to Greek voters June 8, saying, “The Greek people also need to recognize that their hardships will likely be worse if they choose to exit from the eurozone.” However, the U.S. doesn’t expect the election to resolve Greece’s status immediately because the winner will need to form a coalition government.
Economic power engines such as Brazil, China and India also are experiencing a slowdown in growth, but analysts say the European crisis is the greater risk to global growth.
Europe isn’t the only hot spot for Obama at the summit. He’ll also meet with Russian President Vladimir Putin, who snubbed him last month by sending Prime Minister Dmitry Medvedev to a U.S.-hosted gathering of leaders.
That meeting comes amid rising tension between the Obama administration and Putin over efforts to oust Syrian leader Bashar Assad, with Secretary of State Hillary Clinton this week accusing Russia of sending attack helicopters to the Arab country. The U.S. and Russia are also at odds over Iran’s nuclear ambitions and a planned U.S. missile-defense system for Europe.
Though analysts say a resolution won’t be reached at Los Cabos, they said the summit would provide a valuable service in prompting governments to stick to their intentions.
“Don’t underestimate the power of sovereign governments signing a document that says, ‘This is what we shall do,’ ” said Matthew Goodman, a former Obama administration official who’s the chair of the political economy program at the Center for Strategic and International Studies, a research center in Washington. “It provides some ammunition for leaders to take to a domestic audience and say, ‘We really have to address this for our sake, and the world.’ ”