Obama's power in focus as he heads to Europe

3rd November 2011, Comments 0 comments

President Barack Obama headed to France for the G20 summit on Wednesday, with aides denying that America's limited influence in the euro crisis was a symptom of its decaying global power.

Obama left Washington aboard Air Force One for a two-day summit of developed and developing states in Cannes, which was thrown into turmoil by Greece's decision to call a referendum on its EU bailout deal.

He was due to huddle with French President Nicolas Sarkozy and German Chancellor Angela Merkel on Thursday, after the White House called for a "unanimity" of purpose on the crisis to emerge from the summit.

Washington, which fears contagion from Europe could jolt its own fragile recovery, had hoped a eurozone debt deal would mitigate the worst impact of the crisis, but the Greek turmoil has reopened old fears.

"The events in Greece... only underscore the need for Europe to come together and to unite behind conclusive action that resolves this crisis," said White House spokesman Jay Carney on Wednesday.

"Our goal is for there to be a unanimity of purpose coming out of the G20, which is the preeminent forum -- as this administration desired -- for these kinds of discussions about the global economy.

"Clearly Europe is a high priority right now."

Obama went to Europe amid a developing media narrative that Washington's own troubles, a soaring deficit, high unemployment, and a sluggish housing market, have diminished its capacity to fix financial turmoil elsewhere.

Some commentators have interpreted reports that Beijing could provide cash to help finance the European bailout deal as a symbol of shifting influence from one declining superpower, the United States, to an emerging one, China.

"The United States is still the largest economy in the world. It is still the most powerful nation in terms of its alliances and its influence around the world," Carney said.

"That influence comes in a variety of ways, including the wealth of experience that we have.

"The focus here is not on whether or not the Chinese involve themselves financially. I mean, that really is a sideshow to the focus here.

"The focus here is a European problem that requires a European solution for which the Europeans have the resources and capacity necessary.

"That requires the kind of political will that would allow for the rapid implementation of the necessary solutions."

While Obama has been encouraging European leaders from across the Atlantic in frequent telephone calls, his capacity to press for forthright action by his counterparts may be undermined by his diminished domestic political clout.

The president has been unable to take the swift and sweeping action on the slowing US economy that he would like to, after Republicans in Congress refused to pass his $447 billion jobs package.

White House officials are skeptical over a plan for a tax on financial market transactions pushed hard by Merkel and Sarkozy.

Treasury undersecretary Lael Brainard said that while Washington was aligned with Europe on the goal of halting risky behavior by finance giants, it preferred Obama's so far not enacted plan for a financial crisis responsibility fee.

"We think that's an approach that works better than putting the burden on retail investors," she said.

The idea of a tax on bond and stocks transactions is also opposed by Britain, which hosts Europe's largest financial hub in London.

Obama is expected to again press China at the summit to allow Beijing's currency, the yuan, to rise to a value which Washington believes will not artificially penalize US products.

He will also hold bilateral talks on the sidelines of the G20 summit on Friday with Argentine President Cristina Kirchner as both sides seek to move on from a rocky period in relations.

Obama will take another step on the world stage soon after his trip to France, in his native Hawaii, hosting the summit of the Asia Pacific Economic Cooperation forum (APEC) and when he attends an East Asia summit in Bali.

© 2011 AFP

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