November 3, 2011 / 2:57 AM / 8 years ago

Obama to grapple with waning influence at G20

WASHINGTON (Reuters) - President Barack Obama faces the delicate task of pushing European leaders to solve their debt crisis without appearing to lecture them at a summit of world economic powers this week.

Obama heads to France later on Wednesday to urge Europe to fix the long-running crisis that could send the already-weak U.S. economy into another recession.

The White House, which says Europe can solve the crisis on its own, is worried the Greek decision to hold a referendum over its 130 billion euro ($178 billion) bailout will unravel EU efforts to contain its sovereign debt crisis.

Obama is likely to be candid about his concerns when he meets French President Nicolas Sarkozy and Germany’s Angela Merkel on the sidelines of the Group of 20 summit in Cannes.

But the president will need to tread carefully, given the United States is struggling to fix its own fiscal problems and has limited means to intervene in Europe even if it wanted to.

“We’ll see if the president decides to grab this mantle and really drive the G20 discussion,” said Heather Conley at the Center for Strategic and International Studies in Washington.

“European leaders and particularly European finance ministers have not been fully appreciative of U.S. advice and counsel on how to deal with the European crisis because of U.S. domestic challenges,” she said.

William Galston, a former Clinton administration official, said the White House would be careful after U.S. Treasury Secretary Timothy Geithner irked some European ministers when he offered economic advice to Europe in mid-September.

“I think that (Obama) should make it clear that the United States is there to help and to cooperate ... How do we have the standing to lecture someone else?,” said Galston, now a scholar at the Brookings Institution.


The November 3-4 summit comes as Europe’s efforts to stabilize the euro have been thrown back into chaos by Greece’s announcement this week that it will hold a referendum on the austerity measures that the bailout requires.

Markets have tumbled on news of the Greek move that Sarkozy said “took the whole of Europe by surprise.”

Charles Kupchan of the Council on Foreign Relations said it may be possible for world leaders to find ways to calm markets, even if Europe’s crisis takes time to fully resolve itself.

“You can still take steps to contain the uncertainty that is radiating outward from Athens. That will be the objective of the G20,” Kupchan said.

European officials have petitioned Beijing to invest in their rescue fund. White House spokesman Jay Carney said on Wednesday any Chinese funding pledge would be “a sideshow.”

“The focus here is a European problem that requires a European solution, for which the Europeans have the resources and capacity necessary,” he said, stressing the United States could offer guidance based on its own experience with crises.

Experts said the sluggish U.S. economy and fragile environment in Europe meant emerging powers could have outsize influence at this G20.

“There will be a much greater emphasis on the need for coordinated efforts to prevent a contagion from spreading across the major economies,” Kupchan said. “That necessarily means more reliance on China and other emerging powers to step up to the plate, because the United States and its European allies don’t have the liquidity right now to calm nerves.”

Still, U.S. officials dismissed the notion the Obama administration is fretting over a potential rise in clout for China if it steps in to help to Europe.

They noted that the United States pushed for the G20 to replace the G8 as the main global coordinating body precisely because the administration felt that big emerging economies should assume greater responsibilities in the global economy.

U.S. President Barack Obama speaks during a news conference at the G20 Summit in Seoul November 12, 2010. REUTERS/Jason Reed

“The fact that China is stepping up and playing the role it needs to play — why would that be a bad thing?” said one senior U.S. official, who spoke on condition of anonymity.

Kupchan said the G20’s creation “was meant to signify and symbolize the opening up of the inner circle to emerging powers.”

Now, he said, “the leading economies of the Western world are coming with cups in hand, and in a quite weak position both economically and politically. That signifies how dramatically the world is changing and how quickly economic and political influence is shifting.”

Additional reporting by Malathi Nayak, Glenn Somerville and David Lawder

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