Obama won't offer aid to eurozone at G-20 summit
WASHINGTON -- The United States doesn't plan to offer financial help at this week's G-20 summit to European leaders wrestling with a government debt crisis that threatens the global economy.
Instead, U.S. officials said, eurozone countries have the capacity to help themselves — and if they need assistance, they can turn to developing countries led by China as well as the International Monetary Fund.
"Europe has substantial resources that it can bring to bear," Lael Brainard, Treasury undersecretary for international affairs, said Monday on the eve of this week's G-20 summit in Cannes, France.
That was a reference to the $600 billion capacity of the European Financial Stability Facility — and the $1.4 trillion goal set last week by European leaders as a backstop for potential future troubles in countries such as Italy and Spain. In addition, the European Central Bank did not commit new resources last week.
Still, the Obama administration wants to help Europe emerge from its crisis, since a deep recession there would affect banks, multinational companies and exporters here.
"All of us are going to work together to support European efforts," Brainard said at a White House briefing.
For weeks, U.S. officials have made clear their belief that the United States dealt effectively with its own financial crisis in 2008-09 by creating the $700 billion Troubled Asset Relief Program to bail out financial institutions, passing the $825 billion economic stimulus package to jump-start growth and setting higher capital requirements for banks.
That type of "overwhelming force" is what's needed in Europe now, Brainard said, echoing the recommendations of Treasury Secretary Timothy Geithner. The plan unveiled last week includes all the right elements, she said — now the details need to be fleshed out.
Along with the $1.4 trillion rescue fund that still must be accumulated, the agreement calls for a new rescue package for Greece and new capital reserve rules for banks.
Obama set the tone for the U.S. position in Cannes with a column in the Financial Times last week: "I am confident that Europe has the financial and economic capacity to meet this challenge, and the United States will continue to support our European partners as they work to resolve this crisis."
This week's gathering of 20 global economic powers, both established and emerging, already was a "catalyst" for the European deal announced last week, said Mike Froman, deputy national security adviser for international affairs and Obama's "sherpa" at G-20 summits.
"They're action-forcing events to make decisions," Froman said.
The overall goal for the summit, U.S. officials said, is for surplus and debtor nations to agree to seek stronger and more balanced growth. Until that goal is met, Brainard said, the U.S. will remain "too vulnerable to disruptions beyond our shores."
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