President Barack Obama will meet with Group of 20’s French President Nicolas Sarkozy and Germany’s Angela Merkel on Wednesday at the world economic summit in France. He is expected to be frank about pushing European leaders to end their debt situation but has to tread carefully. After all, the country he runs is faced with fixing its own fiscal problems. This limits his means to interfere with the European crisis which threatens to contribute in sending America to another recession.
U.S. believes Europe can handle its crisis but is worried over Greek’s move for a referendum over its 130 billion euro ($178 billion) bailout which may cause EU to contain its debt crisis. Center for Strategic & International Studies’ Heather Conley said it is yet to be seen if Obama can really drive the G20 discussion. European leaders and finance ministers aren’t appreciative of U.S. advice in dealing with the crisis. Former Clinton official William Galston said European ministers were displeased by U.S. Treasury Secretary Timothy Geithner’s offer of economic advice in September.
The summit on November 3 & 4 takes place after the market confusion created by Greece’s notice of a referendum for strict measures required by a bailout. Foreign Relations’ Charles Kupchan said world leaders may be able to still the markets despite some time before the Europe crisis is solved. That has to be G20’s objective, he added. European officials sought China’s help but White House spokesman Jay Carney said on Wednesday that a European problem requires a European solution, for which the Europeans have the resources and capacity. But experts believe emerging powers may have vast influence over G20. Kupchan said there will be greater emphasis on the need for coordinated efforts to prevent a contagion from spreading across major economies. That means more reliance on China and other emerging powers to step up to the plate, because the U.S. and its European allies don’t have the liquidity to calm nerves, added Kupchan.
U.S. officials said the Obama administration is not worried over China’s possible power increase should it decide to help Europe. They said the U.S. pushed for the replacement of G8 to G20 as it felt that emerging economies have to assume bigger responsibilities in the global economy. G20 was to signify and symbolize the opening up of the inner circle to emerging powers, said Kupchan. He said Western world’s leading economies are coming with cups in hand, and in a quite weak position both economically and politically. It signifies how the world is changing and how quickly economic and political influence is shifting.