Leaders to face Europe crises at G-8 summit
By Laura MacInnis and Jeff Mason ,Reuters
May 19, 2012, 12:06 am TWN
WASHINGTON -- Leaders of major industrial economies meet this weekend to try to tackle a full-blown crisis in Europe where fears are growing that Greece could leave the eurozone bloc, threatening the future of the common currency.
U.S. President Barack Obama, the G-8 host, has urged European leaders repeatedly to do more to stimulate growth, fearing contagion from the euro crisis that could hurt the U.S. economy and his chances of re-election in November.
British Prime Minister David Cameron, who has been increasingly vocal in urging Europe to do more to resolve the debt crisis, will tell leaders they must work together to stop it from spreading worldwide, an aide said.
No major economic policy decisions are expected from the talks but officials said Obama hoped to promote a discussion on a comprehensive approach to resolving the crisis.
He will seek to cement a bond with France's new leader at the White House later on Friday before heading to Camp David for the talks.
Francois Hollande, sworn in this week as French president, has already made waves by challenging Europe's austerity focus and saying he will pull French combat troops from Afghanistan by the end of this year.
Obama, 50, may use their introductory meeting in the Oval Office to encourage the 57-year-old Socialist to rethink his Afghanistan plans that put France on an earlier exit timetable than other NATO allies.
But the two leaders, who have both expressed support for pro-growth policies in Europe, are expected to form a common front on the eurozone crisis that could dominate this weekend's Group of Eight talks.
Obama's administration spent heavily to tackle the 2007-2009 U.S. recession, and Hollande is seeking to take the edge off austerity with more job-creating infrastructure investments.
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, and of the eurozone G-8 members, Italian premier Mario Monti was calling for profound growth measures even before Hollande did.
That could leave Germany's Angela Merkel, who insists debt-cutting program cannot be diluted, cutting a lonely figure.
The G-8 summit comes as Greeks are pulling cash from banks amid growing fears that it might crash out of the single currency eurozone. Financial markets fear for the future of the entire currency zone, with Spain's banking sector also under pressure.
The U.S. dollar climbed, world shares fell and German borrowing costs hit record lows on Friday as a deepening Spanish banking crisis, uncertainty about Greece's future in the eurozone and lackluster U.S. data provoked a rush for safe-haven assets.
Heather Conley, a senior fellow at the Center for Strategic and International Studies, said Hollande and Obama “see things very similarly about the need for a better balance between fiscal consolidation, austerity and economic growth.”