G-20 Summit In Mexico To Focus On Euro Crisis
President Obama and other world leaders are gathering in Los Cabos, Mexico, on Monday for the G-20 summit. They're hoping to get some assurances that European governments are getting control of their financial problems before they become a further drag on the global economy.
While the Pacific Ocean beckons from the Mexican resort at the southern tip of the state of Baja California, G-20 leaders are focused across the Atlantic. Europe's economic woes are currently the No. 1 threat to the global economy. No big breakthrough is expected at the summit, but financial markets will be watching closely, especially the election in Greece.
"Europe is our largest trading partner and a key part of the global financial system," says Deputy National Security Adviser Mike Froman. "Therefore, it's very important to the United States and the rest of the world as they work through their issues."
Sunday's Greek election is considered a vote in favor of the eurozone, but there are still plenty of challenges facing the monetary union, which is linked by a common currency but divided by politics and very different economic fortunes.
U.S. Treasury Secretary Timothy Geithner told the Council on Foreign Relations last week that European leaders have a strong incentive to keep the eurozone from falling apart.
"They've decided it's in their interest to hold it together," Geithner says. "What they say to us privately is they will do whatever is necessary to hold it together."
That could include some continentwide banking supervision and bank insurance, along with steps to prevent government interest rates from soaring. U.S. officials have been consulting closely with the Europeans.
But, White House adviser Froman says, "This is not an issue of U.S. leverage. It's Europe doing what's in Europe's interest and what's in the interest of the rest of the global economy."
Solutions won't come quickly, nor will they come at this Group of 20 summit. Only a handful of eurozone countries are represented here. For them, the more important meeting may be a European summit later this month. Still, the rest of the world is looking for some signal at the G-20 that Europe is on track toward a solution.
Froman says that would be part a larger message aimed at promoting economic growth. "I think a unified message about the importance of growth and, most importantly, what Europe can do is our hope for an outcome."
When the global economic crisis hit four years ago, the G-20 countries acted in concert to bolster growth. Since then, many countries have downshifted into austerity measures. And growth is slowing, not only in Europe but also in developing countries like China, as well as the United States.
Some governments have little choice but to cut spending. But because the U.S. is considered a safe haven for investors, the U.S. government is still able to borrow money at historically low interest rates.
Treasury Secretary Geithner says that creates an opening in the U.S. to prop up growth, for instance by investing in public works projects or hiring additional teachers.
"If we could do those things now, we'd be in a stronger place to withstand the uncertainty we're going to face from Europe over a protracted period of time," Geithner says.
President Obama is also holding one-on-one meetings this week with the leaders of Mexico, China and Russia. It's his first face-to-face meeting with Vladimir Putin since Putin returned to the Russian presidency.
Foreign policy adviser Ben Rhodes says the U.S. is working cooperatively with Russia on Iran and Afghanistan — though Russia has resisted U.S. calls for more pressure on its Syrian ally Bashar Assad.
"President Putin clearly is somebody who can articulate where he has differences with the United States," Rhodes says. "But we can also articulate where we have differences with Russia. And I think our assessment is that being candid with one another and clear with one another is in the best interest of the relationship."
The U.S. will renew its call for Assad's ouster in Syria. Rhodes says that doesn't necessarily have to mean an end to Russian influence in that country.
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