Obama says he is confident in European leadership

AP News
Posted: Oct 27, 2011 9:12 PM
Obama says he is confident in European leadership

President Barack Obama said a new European plan to tackle the continent's debt crisis would have an impact on the U.S. economy, but he stopped short of saying whether it would be enough to prevent another global recession.

"If Europe is weak, if Europe is not growing, as our largest trading partner that's going to have an impact on our businesses and our ability to create jobs here in the United States," Obama said Thursday during remarks in the Oval Office.

In a separate opinion piece written for the Financial Times, the president urged European leaders to build a "credible firewall" to contain the crisis.

European leaders agreed Thursday to a deal to have banks take bigger losses on Greece's debts and to boost the region's weapons against market turmoil.

While Obama did not address specifics of the deal in his remarks, he praised European leaders for recognizing that it was in the world's interest to stabilize the continent's economy. When asked whether the deal would prevent another recession, Obama would only say that the agreement was a sign of progress.

"The key now is to make sure that it is implemented fully and decisively, and I have great confidence in the European leadership to make that happen," he said.

Ahead of his meeting with several European leaders next week in France during the G-20 economic summit, the president offered a more detailed reaction to the agreement in his Financial Times opinion piece.

"Given the scope of the challenge and the threat to the global economy," he wrote, "it is important for all of us that this strategy be implemented successfully _ including building a credible firewall that prevents the crisis from spreading, strengthening European banks, charting a sustainable path for Greece and tackling the structural issues at the heart of the current crisis."

He also urged nations to do their part to make sure that global growth is balanced. In a clear reference to Germany, China and Japan, he called on countries with large surpluses to take additional steps to support growth and for export-oriented economies to boost domestic demand.

The president's remarks came at the beginning of a meeting with Prime Minister Petr Necas of the Czech Republic. Necas had arrived in Washington from Brussels, where he had been part of the Eurozone negotiations, Obama said.

World stock markets surged Thursday on the news that the leaders had clinched a deal that everyone hopes will prevent the crisis from pushing Europe and much of the developed world back into recession and keep the currency union from unraveling. But analysts were more cautious, noting that the deal remains vague and its success hangs on the details.

The strategy unveiled after 10 hours of negotiations focused on three key points. These included a significant reduction in Greece's debts, a shoring up of the continent's banks, partially so they could sustain deeper losses on Greek bonds, and a reinforcement of a European bailout fund so it can serve as a $1.39 trillion firewall to prevent larger economies like Italy and Spain from being dragged into the crisis.

In an appearance with Greek Foreign Minister Stavros Lambrinidis in Washington on Thursday, Secretary of State Hillary Rodham Clinton also praised the European plan and Greece's efforts to reform its economy.

"The Greek people are making major changes and big sacrifices to return their country to financial health and economic competitiveness," she said.


Associated Press writers Jim Kuhnhenn and Desmond Butler contributed to this report.