Obama tells EU to take decisive action on debt

WASHINGTON Mon Nov 28, 2011 5:53pm EST

U.S. President Barack Obama looks up during a meeting with leaders of the European Union to discuss economic issues at the White House in Washington November 28, 2011.  Flanking Obama are Secretary of State Hillary Clinton and Treasury Secretary Tim Geithner.  REUTERS/Kevin Lamarque

U.S. President Barack Obama looks up during a meeting with leaders of the European Union to discuss economic issues at the White House in Washington November 28, 2011. Flanking Obama are Secretary of State Hillary Clinton and Treasury Secretary Tim Geithner.

Credit: Reuters/Kevin Lamarque

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WASHINGTON (Reuters) - President Barack Obama pressed European Union officials on Monday to act quickly and decisively to resolve their sovereign debt crisis, which the White House said was weighing on the U.S. economy.

After meeting European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso, Obama said he was keen to see the euro zone crisis end.

"I communicated to them that the United States stands ready to do our part to help them resolve this issue. This is of huge importance to our economy," Obama, seated next to the EU leaders, told reporters.

A possible step would be for Washington to support more aid to Europe from the International Monetary Fund, where the United States is the biggest shareholder.

But William Kennard, the U.S. envoy in Brussels, said there was no discussion of the United States making any financial obligations to help Europe or increasing its payments to the IMF - moves bound to face stiff political opposition given fiscal pressures gripping the U.S. Congress.

Rather, the Obama administration has focused on offering advice on rescue programs and how to make tough political decisions drawn from its experience during the U.S. financial crisis of 2008.

The U.S.-EU summit furthered those discussions, Kennard said, refusing to discuss any specifics.

"Ultimately, we believe that this is a problem that Europe has to solve and has the capacity and the resources to solve it," he said at a news conference.

Europe conveyed that the situation is difficult and leaders are not complacent, the EU Ambassador to the United States Joao Vale de Almeida said.

"Europe is committed. Europe is determined," he said, adding that the December 9 EU summit would be a "milestone."

EU leaders are expected to agree on steps toward fiscal union, considered critical for a longer term solution to Europe's debt crisis.

White House spokesman Jay Carney said the IMF already has substantial resources and has a role to play in helping Europe but also underscored the U.S. view that Europe has the capacity to handle its own problems.

"The issue here is a European issue and Europe needs to act," he said.

Obama has been in regular telephone contact with German Chancellor Angela Merkel, French President Nicolas Sarkozy and other European leaders as debt woes have piled up in Greece, Italy and Spain, hurting stock markets and raising doubts about U.S. exports and growth.

Treasury Secretary Tim Geithner and top White House advisers took part in Monday's closed-door talks, the latest in a series of annual summits between American and EU leaders.

The meeting did not include Merkel, Sarkozy and other European heads of state who will ultimately need to make tough decisions to salvage the euro zone.

But Van Rompuy and Barroso wield influence as heads of key EU institutions at the heart of efforts to address the crisis, which has thrown the future of the 17-nation currency bloc into doubt at a moment of weakness for the global economy.

JOBS OBSTACLE

Avoiding contagion from Europe is critical for Obama, a Democrat whose re-election prospects next November hinge on his ability to shield the U.S. economy from another downturn and bring down the unemployment rate of 9 percent.

"If Europe is contracting or if Europe is having difficulties, then it is much more difficult for us to create good jobs at home," Obama said.

So far, U.S. exports have remained strong in spite of the turmoil in Europe, rising in the first nine months of 2011 by about 15 percent from the same period last year.

Exports to the EU account for about 2 percent of total U.S. output, so a mild EU recession is expected to shave only about one- or two-tenths of a percentage point from U.S. growth in the first half of 2012, Wells Fargo estimates.

Van Rompuy said it was wrong to suggest Europe was the only drag on the global economy and said it was important for other economies to pitch in to boost growth.

In a joint statement after the meeting, the United States and European Union said they agreed on the need to work together with emerging economies to rebalance global growth and for the United States to address its fiscal issues in the medium term.

They also said they were determined to see Iran comply with its international obligations related to its nuclear program. Van Rompuy said the European Union was preparing new restrictive measures to further isolate Tehran.

The joint statement, issued hours after Brussels announced new financial sanctions on Syria, also urged Damascus "to end violence immediately" and permit a peaceful and democratic transition of government.

Catherine Ashton, the EU's foreign policy chief, and U.S. Secretary of State Hillary Clinton also took part in the talks which lasted just over two hours.

(Additional reporting by David Lawder, Stella Dawson, Doug Palmer, Steve Holland, Caren Bohan, Lesley Wroughton and Glenn Somerville in Washington and Luke Baker in Brussels; Editing by Paul Simao and John O'Callaghan)

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Comments (21)
OWP wrote:
What about US debt ?

十一月 28, 2011 9:12am EST  --  Report as abuse
rowettd wrote:
I think that if I were presiding over the current U.S. economy and a House and Senate that are abject failures as governing bodies, I would sit quietly in a shadowy corner of the room and hope nobody notices me. I certainly would not presume to tell other nations that they should get their houses in order — especially in light of the fact that it was the U.S. banking/gambling industry that precipitated the current global financial crisis.

十一月 28, 2011 12:19pm EST  --  Report as abuse
The arrogance of the Idiot in Chief might make sense if the US had not created the crisis. US financial institutions created sub-prime mortgages, made them 40% of the US mortgage market, created mortgage backed securities for insurances, and created hedge funds and derivatives for additional insurance. Then, US financial institutions committed the great crime: they coerced US credit rating agencies to give AAA ratings to securities that should never have had AAA ratings. Then, US financial institutions sold the fraudulent securities to NATO allies, the EU, Europe, the Middle East, Asia, Latin America, and the US. The US cheated its allies, the rest of the world, and itself. US banks sit on $2 trillion in cash to pay restitution and fines for their crimes. A few articles appear each week about US banks paying a few hundred million in fines to settle legal charges without admitting guilt. The European banks would not have such a huge crisis without the criminal actions of US banks that sold the bad debt. Now, the US Idiot in Chief wants Europe to take decisive action, but he offers no suggestions for creating practical fiscal and economic plans that have sound and solid business actions to reassure creditors. I have pointed out many times that money is not intrinsically valuable; it is a tool that must be used to generate the food, clothing, shelter, factories, stores, transportation, energy, other items, and tax revenues that have value in the world’s current situation. Presenting intelligent, prudent, practical suggestions (not orders) is better than complaining about “headwinds” that Americans created for themselves. This has greater importance when the only idea in the article suggests that the Idiot in Chief and his advisors want to stack Europe’s cash in the vaults of the European Central Bank where the money will not grow, but the interest charges will rise. Perhaps, the Idiot in Chief could seek advice from the head of the Small Business Administration to offer a few concrete ideas instead of vague economic theories, philosophies, dogmas, and other “isms” that give the false appearance of justifying blame without offering serious solutions.

十一月 28, 2011 4:09pm EST  --  Report as abuse
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