Obama: Details Needed on Europe Bailout Plan
Nov 3rd 2011 7:53AM
Updated Nov 3rd 2011 7:57AM
CANNES, France (AP) - With much at stake for the United States, President Barack Obama said Thursday that the most important task for world leaders gathered at an economic summit in France was to resolve the European financial crisis.
He said that the European Union had taken important steps toward a solution, but "we're going to have to flesh out more of the details about how the plan will be fully and decisively implemented."
Speaking alongside French President Nicolas Sarkozy after the two met privately on the sidelines of the Group of 20 summit of leading world economies, Obama said they discussed developments in Greece "and how we can work to help resolve that situation." Greece is in political upheaval after the prime minister shocked Europe by calling for a popular vote on the European bailout plan. But after meeting for about an hour with Sarkozy Obama didn't give any details on what the U.S. might do in concert with its European allies.
"The United States will continue to be a partner with the Europeans to resolve these challenges," Obama said.
At a later meeting with German Chancellor Angela Merkel, Obama added, "We are now, having seen some progress, looking forward to working together to figure out how we can implement this in an effective way, to make sure that not only is the eurozone stable but the world financial system is stable as well."
Sarkozy said after meeting with Obama that "We're trying to build the unity of the G-20." He said the top issue is economic stability, "in particular the issue of the Greek crisis"
Sarkozy also said that he and Obama agree that businesses should contribute to resolving the global financial crisis.
Sarkozy said the pair "found a common analysis to make the financial world contribute" to finding a solution. He did not elaborate, but said he welcomed Obama's "understanding on subjects such as a tax on financial activities."
Sarkozy and some others in Europe have been pushing for a small tax on all financial transactions that could be used to help poor nations and reduce debts. The Obama administration is cool to the idea, favoring instead fees on the biggest banks.
As the global economic meeting was getting under way at this seaside resort, Greek Prime Minister George Papandreou was facing a revolt in Athens over his surprise planned referendum on the country's hard-won international bailout package. Facing calls to step down, he convened a cabinet session for later in the day and was facing a confidence vote on Friday. Papandreou's move infuriated European leaders and rocked financial markets worldwide, jeopardizing the long-sought deal to resolve Europe's debt crisis.
The situation poses several risks for the U.S. and Obama. If Europe can't contain the crisis in Greece, it could spread across the continent and hit U.S. shores just as the weak U.S. economy has begun to show some positive signs of growth. With unemployment stuck at 9.1 percent, any adverse economic event in Europe could stall the U.S. recovery, causing further pain and hurting Obama's own re-election prospects.
Obama has been a key player at past Group of 20 summits. But his role in these two days of meetings, his fifth G-20, was overshadowed by the situation in Europe even before he arrived in Nice Thursday morning after flying overnight from Washington.
While not exactly a bystander, Obama brought few tools with which to help the Europeans.
White House officials have been consistent in placing the burden for a solution on European leaders, asserting that they have the resources to solve the problem and do it swiftly. White House spokesman Jay Carney said the U.S. could offer unique insights from the 2008 financial crisis on Wall Street and the steps taken to avert disaster.
"The United States, obviously, has a great deal of influence, because of who we are and the role we play in the global economy, and globally in general," he said Wednesday. "I would not discount the significance of the experience that we have in terms of its usefulness to the Europeans."
Carney added: "It's very important that the Europeans take the conclusive action that's necessary to deal with this crisis, obviously for their own sake, but we're - our interest is not entirely altruistic. It's also because we are a very important part of the global economy, and it affects our economy."
Beyond the threat of contagion from the crisis, the European emergency could affect the U.S. by altering geopolitical balances. China is considering helping Europe build a $1.4 trillion bailout fund that would protect Italy and Spain in the event of a Greek default.
The U.S. is in no position to offer such financial assistance while participation by China would expand its influence in Europe, potentially at the expense of the U.S.
"European preoccupation with the euro crisis could dash all American hope for trans-Atlantic cooperation in coping with China," Bruce Stokes, a senior economics fellow at the German Marshall Fund said in written testimony for a U.S. Senate committee hearing.
Stokes said Beijing is showing strength in the South China Sea and the Indian Ocean, is extending its influence in Pakistan, Africa and Latin America, and is developing a brand of Chinese state capitalism that many around the world are finding to be more attractive that what is in place in Europe and even the United States.
"Washington will be hard pressed to counter this Chinese influence on its own. And we could find ourselves without an effective European partner," Stokes said.
But Carney rejected the idea that Obama was going into the summit in a position of weakness.
"The United States is still the largest economy in the world. It is still the most powerful nation in terms of its alliances and its influence around the world. And that influence comes in a variety of ways, including the wealth of experience that we have," Carney said. "But the focus here is not on whether or not the Chinese involve themselves financially. I mean, that really is a sideshow to the focus here. The focus here is a European problem that requires a European solution."
Copyright 2011 The Associated Press.