Euro crisis and growth the focus at G8 summit
THE G-8 summit that will convene in the presidential retreat at Camp David, Maryland tonight and tomorrow is widely described as a euro crisis summit. Though other issues on the agenda include food and energy security and a host of Middle East problems, the question of Greece’s continued membership in the euro zone will dominate proceedings.
The leaders of Europe’s biggest economies – Germany, Britain, France and Italy – will be in the hot seat, as President Barack Obama and the leaders of Canada and Japan urge them on.
President Vladimir Putin of Russia snubbed the gathering by sending his prime minister, Dmitri Medvedev, in his place.
“The conversation will be about how to achieve growth, how to send positive signals to the markets,” Michael Froman, Mr Obama’s “Sherpa” or chief organiser for the summit, told a seminar at the Brookings Institution.
US officials have repeatedly stressed that the problem is Europe’s to solve.
“We can share our experience, share ideas – not from a position of arrogance or superiority, but with empathy,” Mr Froman said.
“We’ll make it clear how important it is to the US and the rest of the global economy.”
US officials see the European crisis as a threat to the fledgling US recovery, upon which Mr Obama’s chances of re-election depend, and have implied a degree of blame.
“Europe is still . . . in a difficult state, partly because they didn’t take some of the decisive steps that we took early on in this recession,” Mr Obama said on May 10th.
Europe’s weakness “is creating uncertainty for the business community here”, he added in a television interview this week.
Administration officials have said the Europeans ought to have conducted stress tests on banks and bolstered capital ratios more rapidly, as the US did.
“We’ve got a big stake in the managing,” treasury secretary Tim Geithner told a forum in Washington.
The Europeans “have got a long way to go, a very difficult set of challenges, and they just need to make sure that they can convince the world that they’re going to manage these challenges”.
There will be three newcomers at tonight’s dinner: French president François Hollande and the Italian and Japanese prime ministers, Mario Monti and Yoshihiko Noda.
Attention will focus on Mr Hollande, who will meet Mr Obama in the White House earlier in the day.
“This will be Hollande’s first chance to interact with leaders who gave him the cold shoulder during his campaign,” said Justin Vaisse, an expert on the US and Europe at Brookings.
“François Hollande met with hostility when he promised to renegotiate the fiscal treaty,” Mr Vaisse noted.
“Since then, that has become the consensus. There will be a package of growth measures to balance the fiscal compact treaty.[German chancellor Angela] Merkel runs the risk of being isolated [at the G-8 summit]. The US is clearly on the side of growth.”
“President Obama and our economic team have been saying for some time that growth had to factor into a European recovery,” secretary of state Hillary Clinton told USA Today.
“We’ve been delivering that message, publicly and privately.”
Chancellor Merkel shows some sign of softening earlier positions. “I have the will, the determination to keep Greece in the euro zone,” she told CNBC on Wednesday.
Measures proposed by Mr Hollande, such as creating euro bonds to fund infrastructure projects, are similar to Mr Obama’s approach to the US economy, but have been opposed by the chancellor.
US experts said these issues were unlikely to be resolved at Camp David, and will be discussed again at the May 23rd European summit.
The results of the June elections in France and Greece will again be crucial.