President Obama’s “European Vacation”

Mar 29, 2009 11:25am

White House press secretary Robert Gibbs jokingly referred to President Obama’s trip to Europe for the G-20, NATO, and EU summits as "our European vacation," and it’s clear that little soothing or relaxing awaits the young president as he prepares for his flight to London.

Over the weekend, the German Der Spiegel obtained a draft communiqué from British Prime Minister Gordon Brown urging the G20 nations to pledge $2 trillion in stimulus. While a Downing Street spokesman told Reuters that this was an old draft and "nothing more than the IMF’s estimate of action already announced," the figure nonetheless reportedly prompted a strong reaction from Brown’s European counterparts.

German chancellor Angela Merkel assailed the "global new deal," the Times of London reports "I will not let anyone tell me that we must spend more money."

Spanish finance minister Pedro Solbes concurred, saying, "In these conditions I and the rest of my colleagues from the eurozone believe there is no room for new fiscal stimulus plans."

This strong reaction comes as President Obama faces the task of lining up his G-20 counterparts to support "concerted action around the globe to jumpstart economic growth," as Gibbs said on Saturday. Another priority: "that we are advancing a regulatory reform agenda to ensure that this crisis never happens again and prevent anything like that in the future."

President Obama can rely upon close allies such as Brown for support, but despite his personal popularity worldwide Mr. Obama is now officially the face of America as it is — not the America Europeans dream about — and thus he faces a tough crowd.

Czech Prime Minister Mirek Topolanek told members of the European Parliament in Strasbourg that "the US Treasury Secretary talks about permanent action and we at our [EU summit] were quite alarmed by that. He talks about an extensive US stimulus campaign. All of these steps are the road to hell."

Even in London, Mervyn King, the Governor of the Bank of England, urged Brown to stop spending

"Given how big these deficits are, I think it would be sensible to be cautious about going further in using discretionary measures to expand the size of those deficits," King told the Treasury select committee on Tuesday. "I think the fiscal position in the UK is not one where we could say, ‘Well, why don’t we just engage in another significant round of fiscal expansion?’"

Southward, at the Progressive Governance Summit in Vina del Mar, Chile, this weekend, Vice President Biden got a preview of some of the worldwide hostility towards the U.S. via Wall Street — and the skepticism towards American capitalism in general.

Brazil’s President Luiz Inacio Lula da Silva complained of those who turned the global economy into "a gigantic casino…In the end, we reject the blind faith in the market."

Biden expressed support for regulatory reform but cautioned that it not go too far. "We should not overreact," Biden said. "A free market still needs to be able to function."

All this plus, of course, global security and terrorism issues, Afghanistan, Pakistan, Iran’s nuclear program, the Israel/Palestine conundrum, the missile defense shield, plus those pesky Russians and Chinese pushing for a new international currency to replace the ailing US dollar.

"It is quite obvious that the existing currency system has not coped with the existing challenges," Russian President Dmitry Medvedev told the BBC this weekend. "We were lucky to have a set of currencies: dollar, euro, and a pound. But in the future this system should be based upon a multi-currency basket, it should also include other regional reserve currencies. If we manage to agree on that, in the future we could talk about creating a kind of a super currency."

- jpt

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