* Obama engaged in helping to stem European crisis
* Obama, Zapatero discuss economic reforms
(updates with background)
By Jeff Mason
WASHINGTON, May 11 U.S. President Barack Obama
encouraged Spain on Tuesday to implement economic reforms seen
as critical to helping prevent a European debt crisis from
stalling U.S. and global economic recovery.
Obama called Prime Minister Jose Luis Rodriguez Zapatero to
discuss the importance of "resolute action" by Spain, a country
whose public finances, along with Portugal's, have caused the
most concern after those of Greece, which secured a European
The White House said Obama was actively engaged in ensuring
that Europe's debt crisis did not hurt the global economy.
Obama has held phone calls with German Chancellor Angela
Merkel and French President Nicolas Sarkozy about the European
crisis in recent days.
Obama's call on Tuesday adds a U.S. voice to European
pressure on Zapatero, who has so far shied away from structural
reforms opposed by trade unions but is now facing new calls
from EU leaders to slash spending again and tackle his
country's economic crisis.
Obama's spokesman Robert Gibbs said Spain was "one of the
countries that ... because of some of their problems, need to
undertake reforms that the prime minister is starting to work
European Union and International Monetary Fund officials
pledged $1 trillion of emergency aid to weak euro zone
countries early on Monday in return for action on public
finances by Zapatero and his Portuguese counterpart.
The Spanish government said it would not draw on any of the
emergency funds but promised on Monday to cut the budget
deficit by a further 15 billion euros, 0.5 percent of gross
domestic product, by 2011.
The White House said in a statement that Obama and Zapatero
"discussed the importance of Spain taking resolute action as
part of Europe's effort to strengthen its economy and build
Obama expressed U.S. support for those efforts, the
Germany approved the biggest national contribution to the
$1 trillion euro zone rescue package on Tuesday [ID:nN11120014]
but investor skepticism overran initial euphoria over the plan,
knocking the euro down and pulling most global share prices
Gibbs stressed that Obama had encouraged European Union
leaders to take the steps necessary to address the crisis
facing many of the 27-nation bloc's member nations.
"Our economic team and the president have been engaged over
the course of many weeks in monitoring the situation that was
going on with many of these countries, encouraging them to take
the steps that are necessary to deal with it because of a fear
that anything might stem the recovery that we believe is taking
place," he told reporters.
"We continue to play a role in encouraging the Europeans
... to do what's necessary to ensure that this problem is dealt
with and doesn't spread," he said.
(For other stories on the euro crisis, click on [EU/LOOK])
(additional reporting by Steve Holland and Axel Bugge;
Editing by Cynthia Osterman)