* U.S. president sets tone for weekend G8 summit
* Germany's Merkel could be alone stressing austerity
* France's Hollande signals sticking to Afghan pullout vow
By Caren Bohan and Alister Bull
WASHINGTON, May 18 U.S. President Barack Obama
pressed Europe on Friday to shift toward a more pro-growth
policy and away from austerity to tackle a crisis that threatens
to push Greece out of the euro zone and send economic shockwaves
Setting the tone for a weekend G8 summit, Obama made clear
he was aligning himself with the new French president's drive
for more economic stimulus in the recession-plagued euro zone
instead of emphasizing belt-tightening programs spearheaded by
Obama's stance reflects his worries that the euro zone
contagion, which threatens the future of the single currency,
could hurt the fragile U.S. economic recovery and his own
re-election chances in November.
After White House talks with French President Francois
Hollande, Obama said the two agreed that tackling the euro-zone
crisis was "an issue of extraordinary importance, not only to
the people of Europe, but also to the world economy."
"We're looking forward to a fruitful discussion later this
evening and tomorrow with the other G8 leaders about how we can
manage a responsible approach to fiscal consolidation that is
coupled with a strong growth agenda," Obama told reporters.
German Chancellor Angela Merkel, who has insisted on the
need for tough fiscal discipline to bring down suffocating debt
levels across the euro zone, could find herself increasingly
alone at the summit at Camp David in Maryland.
When G8 leaders gather at the presidential retreat starting
with a working dinner on Friday, British Prime Minister David
Cameron, who has been increasingly vocal in urging Europe to do
more to resolve the debt crisis, will insist they must work
together to stop it from spreading worldwide, an aide said.
No major economic policy decisions are expected from the
talks but Obama will press for a comprehensive approach to
resolving Europe's debt troubles.
European shares hit their lowest level since December on
Friday, depressed by the prospect that a Greek euro exit would
spread turmoil in the currency bloc and engulf much larger
economies such as Spain's.
While Obama and Hollande found some common ground on
economics ahead of the summit, the meeting also showed
differences over France's commitment to the NATO military
mission in Afghanistan.
Hollande, a socialist sworn in this week as French
president, reminded Obama of his campaign pledge to pull French
troops out of Afghanistan by the end of 2012, earlier than the
alliance's timetable. But Hollande said France would support the
NATO effort in other ways.
Obama was expected to try to get Hollande to rethink the
French withdrawal plan.
But the two leaders appeared more in sync on the euro zone
crisis that is expected dominate the Group of Eight talks.
Meeting with Obama for the first time since his election
victory earlier this month, Hollande said he spoke to Obama
about the need to put a priority on growth. They discussed their
shared concerns about Greece and the belief in the importance of
keeping Greece in the euro zone, Hollande said.
Obama's administration spent heavily to try to tackle the
2007-2009 U.S. recession, and Hollande is seeking to take the
edge off austerity with more job-creating infrastructure
He is not alone. Cameron has become increasingly vocal in
demanding Europe's leaders act more decisively. Canada's Stephen
Harper has been a frequent critic. Of the euro zone G8 members,
Italian premier Mario Monti was calling for profound growth
measures even before Hollande did.
That could leave Merkel, who insists debt-cutting programs
cannot be diluted, cutting a lonely figure.
"Germany is absolutely quite isolated," said Domenico
Lombardi, a former International Monetary Fund official who now
is a senior fellow at the Brookings Institution think tank.
The G8 summit comes as Greeks are pulling cash from banks
amid growing fears that it might crash out of the single
currency euro zone. Financial markets fear for the future of the
entire currency zone, with Spain's banking sector also under
Nearly two thirds of Greeks voted on May 6 for parties of
the radical left and far right which oppose the austere terms of
an EU/IMF assistance programme. Talks failed to avert a repeat
election, which is now set for June 17.
Heather Conley, a senior fellow at the Center for Strategic
and International Studies think tank, said Hollande and Obama
"see things very similarly about the need for a better balance
between fiscal consolidation, austerity and economic growth."
One of Obama's closest aides, National Security Adviser Tom
Donilon, said the United States welcomes the evolving debate in
Europe about the "imperative for jobs and growth," but he said
the president's intention is not to drive a wedge between
Europe's two biggest economies, Germany and France.
"The president looks forward to leading a discussion among
the leaders about the imperative of having a comprehensive
approach to manage the crisis and get on a sustainable path
towards recovery in Europe," Donilon said.
Obama, a Democrat, has pitched a similarly "balanced"
approach combining short-term stimulus and longer-term cuts to
try to heal the U.S. economy and stoke hiring that has not
recovered from the financial crisis.
Mitt Romney, the presumptive Republican nominee to face
Obama in the Nov. 6 election, has made reducing the U.S. debt
load, which has escalated during Obama's tenure, one of his key
"A balanced approach that includes not just austerity but
growth and job creation is the right approach," White House
spokesman Jay Carney said on Thursday, explaining Obama's
message to the G8.
Bruce Jones of the Brookings Institution said because
Obama's re-election prospects hinge so directly on the health of
the American economy, he has a huge interest in getting Europe
on a healthy growth track. "Even if he wasn't in an election
season, any president of the United States has a lot riding on
the Europeans getting this right," Jones said.
Cameron, worried about the impact of the euro zone crisis on
a weak British economy, will call for a "strong and united
commitment to securing the economic recovery and to support job
creation," his aide said.
Also on the summit agenda will be the price of oil and
policy options to address it, although Brent crude hit a
2012 low on Friday.
Economic policy outcomes are not expected from the
closed-door talks at Camp David, a rustic presidential escape
about two hours from Washington that Obama has visited far less
frequently than his predecessor George W. Bush.
The White House moved the summit to the Maryland retreat
from Chicago in part to give the meeting a more informal flavor.
Absent from the summit will be newly inaugurated Russian
President Vladimir Putin, who is sending his prime minister,
Dmitri Medvedev, in his place.
Hollande and Yoshihiko Noda of Japan are G8 first-timers,
while Monti, Cameron, Harper, Merkel and Obama complete the
line-up of leaders. European Commission President Jose Manuel
Barroso and European Council President Herman Van Rompuy will
It will be the largest international summit ever held at
Camp David, which was built in the 1930s and is best known as
the site of past Middle East peace talks.