How the world sees Greece
 Chicago Tribune | We are not Greece Chicago Tribune The United States is not now and will not become Greece. To the extent that the budget crisis in Europe has lessons for the United States, they go the other way. EJ Dionne: We're not Greece |
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US president adopts more supportive tone than most other world leaders, but main decisions unlikely to be made at G20 summit
Barack Obama hailed the Greek election results as offering a glimmer of hope in a eurozone crisis that is threatening to undermine the US recovery and the president's chances of re-election.
In his first comment on Sunday's election, Obama told reporters at the G20 summit in Mexico on Monday that the Greek election offered a "positive prospect".
That endorsement went much further than most other world leaders, particularly European ones, who have been much more circumspect in their reaction.
The White House has been watching in desperation at European leaders have bounced from summit to summit, leaving the crisis unresolved.
Although Obama needs a quick fix to the eurozone crisis, European leaders cautioned against expecting any solutions to emerge from the G20 summit, the gathering of the most advanced economies.
The euro crisis is acting a drag on business and consumer confidence in the US but the Obama administration has opted against injecting into Europe the billions of dollars that might help stabilise it, partly because it would be near impossible to get such a package through Congress.
Obama, at a meeting with Mexican president Felipe Calderon, who is hosting the summit, told reporters it was going to be a busy day and a half: "The world is very concerned about the slowing of growth that has taken place."
He added: "Now is a time as we've discussed to make sure that all of us do what's necessary to stabilise the world financial system, to avoid protectionism."
The White House issued a bland statement on Sunday welcoming the Greek vote and hoping its government would make "timely progress" on the economic challenges it faces. European leaders want Greece to make deep spending cuts in return for a rescue package.
Obama, who had spent the weekend having a break in Chicago, adopted a more positive tone on Monday than the White House statement from Sunday. "I think the election in Greece yesterday indicates a positive prospect for not only them forming a government, but also them working constructively with their international partners in order that they can continue on the path of reform and do so in a way that also offers the prospects for the Greek people to succeed and prosper," Obama said.
"And we are going to be working under your leadership and with our European partners, and with all countries, to make sure that we're contributing so that the economy grows, the situation stabilises, confidence returns to the markets and, most importantly we're giving our people the chance if they work hard to succeed and do well."
The summit will allow the Europeans to take "one important step in a series of steps that are going to be required to continue to improve global economic prospects," he said.
In spite of Obama's words, the main decisions are unlikely to be made at the summit but at meetings later in Europe, where there is remaining scepticism about whether Greece might yet have to leave the eurozone and also about the future of other members, such as Spain.
 USA TODAY | Obama: Greek vote shows 'positive prospect' for pursuing reforms ABC News President Barack Obama on Monday cautiously welcomed the results of Greece's weekend elections, which saw voters award a narrow victory to a political party ... Obama: Greek election a "positive prospect" for government Obama hails results of Greek elections Obama calls Greek elections 'positive' |
SAN JOSE DEL CABO, Mexico — As he prepared to meet world leaders at an economic summit Monday, President Obama hailed the Greek election results as a “positive prospect” and called on his counterparts to “avoid protectionism” as they seek to stabilize the global economy.
Chancellor Angela Merkel rejects pressure on Germany to act as Berlin blames Spanish PM over handling of €100bn bailout
Angela Merkel signalled yesterday that she is running out of patience with Europe's efforts to get to grips with its currency crisis, venting her exasperation at what she views as the excessive expectation being placed on Germany to save the euro.
In a speech to parliament in Berlin before a fortnight of crucial elections and summitry in Europe, the German chancellor bluntly told the rest of Europe to get real about the crisis, dismissed calls for Berlin to share responsibility for other eurozone countries' debt, and rejected charges that Germany was not doing enough to stabilise the currency.
"Germany is strong, is the economic engine and anchor of stability in Europe," Merkel said. "Germany is deploying this strength and this power for the benefit of people not only in Germany, but also in the service of European unification and the world economy."
But she warned: "Germany's strength is not unlimited. The way out of the crisis in the eurozone can only be successful if all countries are capable of recognising the reality and realistically assessing their strengths."
With the crisis well into its third year, the German leader sounded both pessimistic and newly combative, delivering some of her toughest language to date on Europe's predicament. She is keenly aware that she is increasingly isolated in her approach to the euro drama but shows little sign of shifting.
Referring to the G20 summit opening on Monday in Mexico, she said: "Once again Germany will be the centre of attention." She argued that some of the formulas being proposed for saving the euro using German money would simply amount to illusory short-lived fixes, condemning Europe to a future of high debt and economic mediocrity.
The blunt message from Merkel came days after a new €100bn (£81bn) rescue package for Spain, the eurozone's fourth bailout in two years, and days ahead of Greece's fateful election on Sunday which could decide whether the country becomes the first to be forced out of the single currency club.
Berlin takes the firm view that, regardless of the election outcome, Athens will need to honour the stiff eurozone terms if it is to be kept solvent. It also blames the Spanish prime minister, Mariano Rajoy, for being too slow to request last weekend's bailout after he repeatedly ignored dozens of German requests for a frank analysis of the condition of Spain's banks.
The way the Spanish bailout was handled has unsettled rather than reassured the financial markets, Berlin believes. The role of the London-based European Banking Authority in the Spanish debacle has been in Berlin's view a complete and utter failure, meaning that a new European system of regulating eurozone banks should be established.
Merkel sounded bitter at the international pressure being heaped on Berlin to save the euro by, for example, agreeing to guarantee the savings of bank depositors across the eurozone or yielding to the calls for common European liability for the borrowings of eurozone governments – eurobonds.
"Seemingly simple ideas for pooling [debt] are not feasible constitutionally and totally counterproductive," Merkel declared in one of her strongest rejections to date of eurobonds. "They would turn mediocrity into Europe's yardstick. We would be abandoning our ambition of retaining our prosperity in worldwide competition."
Berlin is incensed that eurozone debtor countries are clamouring for Germany to underwrite their borrowings but are reluctant to cede sovereign powers over fiscal and budgetary policy to Brussels in return. "Liability and control belong together," said Merkel, meaning that copper-bottomed, German-scripted intervention in other countries' budgets would need to be in place before Berlin eventually committed to opening its chequebook to rescue the euro and repair others' profligacy. "All other discussion amounts to a bogus solution of our problems."
The robust talk from Merkel came as Madrid's borrowing costs broke through the affordability barrier of 7% for the first time in the history of the currency despite last weekend's eurozone agreement to bail out Spain's rotten banks.
If Berlin is frustrated with events in Spain, there are also worsening frictions with the new French regime of President François Hollande. Following talks in Rome with the Italian prime minister, Mario Monti, Hollande was expected to unveil his first euro rescue plan ahead of an EU summit in a fortnight. The plan calls for using the eurozone's bailout fund to rescue teetering banks directly and for the fund to be granted a banking licence so that it can tap more money from the European Central Bank.
The proposals are anathema in Berlin, suggesting a Franco-German clash is looming. For the first time in years the French and German leaders are approaching an EU summit with sharply conflicting positions. The convention is that they get together before a summit and draft joint proposals which are then swallowed by the rest of Europe.
But the Germans believe that Hollande, in his first moves as president, is peddling a false prospectus by, for example, reducing the retirement age. With youth unemployment in France at 25% and a widening competitiveness gap with Germany, Berlin takes the view that the markets will force Hollande to change track and conform more to German presciptions on European and national economic policy.
Ahead of the G20 summit, where the Obama administration is certain to try to pressure Merkel into more immediate action to stabilise the euro, the chancellor also sent a signal to the White House which is worried that a worsening crisis in Europe could ripple across the Atlantic and damage Obama's re-election chances in November. Germany is already doing its best, Merkel declared.
She is known to take a dim view of US calls for fiscal stimulus to try to get Europe growing. Such policies in the US are not producing a sustainable American recovery or lowering unemployment, Berlin believes.
