Tensions Rise at G-20 Economic Summit

Global Economic Crisis, Afghanistan Will Be Key Focus for President in Europe.

March 30, 2009, 11:02 PM

March 31, 2009 -- President Obama arrived in London today to take part in the G-20 summit, the largest gathering of world leaders coping with an economic crisis since the Great Depression. But unlike Obama's first trip to visit foreign leaders during the campaign last summer, not everyone is cheering him on or agrees with his bottom line: to increase stimulus spending by other industrialized countries.

Germany and other European countries are leading the pushback against the Obama administration's economic policies. Having already passed stimulus packages with extensive social spending programs, many European countries do not want to take on even more debt.

"It makes no sense to pump more and more money in our economy whenever we haven't restored the confidence on the financial markets," German Finance Minister Peer Steinbrueck said.

Many foreign countries blame unscrupulous American capitalism for having sparked the recession in the first place. Russian and Chinese leaders have proposed a new international currency to replace the once-almighty U.S. dollar as the world standard -- a move the White House shot down today.

Another major point of contention among world leaders: more regulations for financial institutions to prevent future disasters.

Speaking at St. Paul's Cathedral today, British Prime Minister Gordon Brown said bankers have ignored basic morals that parents teach children.

"We don't reward them for taking irresponsible risks that would put them or others in danger, and we don't encourage them to seek short-term gratification at the expense of long-term success," Brown said.

But proposals for new regulations that are supported by Brown and Obama are not seen as strict enough by some foreign leaders. French President Nicolas Sarkozy is threatening to walk out of the conference if the countries do not go far enough with stricter international financial regulations.

The French president is quoted in the Paris newspaper Le Figaro vowing, "If there's no progress in London, there'll be an empty chair. I'll get up and leave."

"Yes, we will," French Finance Minister Christine Lagarde told the BBC. "President Sarkozy was very clear on that front. He said that 'If the deliverables are not there, I won't sign the communiqué'... It means walking away."

The report cited Sarkozy's advisers as saying Monday the French delegation would balk at a summit that produces a "false success with language that sounds good but contains no commitments."

The BBC interview brought into public view tensions that have been simmering for weeks among European countries and the U.S. over how to deal with the economic meltdown.

Sarkozy had earlier said the economic crisis was caused by "Anglo-Saxons" and is pushing for tougher regulations, including rules that would apply to money launderers, tax havens, and companies and hedge funds that could threaten the economic system.

Having the summit erupt in bickering would be a blow to Obama's hopes to forging an international strategy for economic recovery.

The White House did not immediately react to Sarkozy's remark.

"I haven't seen specific comments from Sarkozy… All I can say is we're working closely with all of the G20 on a robust regulatory reform agenda. The president has been personally involved in this," said Mike Froman, deputy national security adviser for international economic affairs.

The White House was hoping to avoid public flare-ups at the summit, although officials are that Obama will be facing a tougher audience than the last time he went to Europe as a candidate when he drew huge adoring crowds in Germany.

Obama still remains popular abroad and Europeans have applauded him for reversing many of the most controversial policies of President George W. Bush, including his move to close the Guantanamo Bay prison in Cuba, ending aggressive interrogation techniques and outlining a plan to withdraw troops from Iraq.

But Obama will encounter European leaders who are skeptical about his administration's economic policies and who are unwilling to commit further resources in Afghanistan.

Bill O'Reilly of Fox News show "The O'Reilly Factor" told "Good Morning America" today that Obama will have make a special effort on the issues of the global economy and help with Afghanistan.

"President Obama has to convince the Europeans that are urgent: No 1, to cooperate with America economically, to stop the nonsense and try to stabilize. If we go down, they go down.

"The second thing, Afghanistan. These pinheads in Europe, what do they think is going to happen?" O'Reilly told "GMA." "If we say to them, okay you're not going to help out NATO or our forces in Afghanistan, well the Taliban is going to come back in and it will be a replay of 9/11."

At the heart of the eight-day, five-country trip, Obama's first overseas as president, is the G20 summit where European concerns over the U.S. economy will be front and center.

Besides forging an economic alliance at the summit, Obama has two other major challenges during this whirlwind European trip:

The biggest point of disagreement heading into the summit is how best to stabilize and grow the global economy and there are wide differences in the approaches favored by the G20 leaders.

Obama has urged foreign governments to spend more in order to spur economic growth, while European leaders have preferred greater regulation to get the economy to bounce back.

The president will be joined by his wife, first lady Michelle Obama, who will have her own schedule of events including a visit to an all-girls school in London; a tour of a London health facility with Sarah Brown, Britain's first lady; and events with other NATO spouses in France.

Obama and the first lady will pay a courtesy call to Queen Elizabeth II of England at Buckingham Palace.

First up for Obama is the G20 economic summit, made up of leaders from 19 major and developing nations and the European Union. The G20 nations represent more than 85 percent of the global economy, about 80 percent of world trade and two-thirds of the world's population.

Global Economic Recovery

Brown, the summit's host, is pushing for a united global economic front.

"We can transform the summit from just an annual meeting into an unstoppable progressive partnership to secure the global change the world needs," Brown said.

The goal for the meeting is twofold: agree on a way forward to manage the current global economic crisis and develop a plan to prevent future crises.

But those two goals pose a significant challenge for Obama. Though the other G20 nations are looking to the United States to take the lead, their leaders are not shy about disagreeing with the American approach.

Leaders from France, Germany, Russia and China arrive at the summit in London armed with skepticism about the American economy and the Obama administration's plans for recovery.

Many world leaders have publicly resisted Obama's call for global economic stimulus efforts.

Last week, Czech Prime Minister Mirek Topolanek deemed the Obama administration's economic policies "a way to hell."

"America is repeating the mistakes from the '30s. … Extensive stimuluses and calls for protectionism," said Topolanek who is also the current president of the European Union. "The worst about these steps is that they are intended to be permanent, which is a way to hell."

Brazilian President Luiz Inacio Lula da Silva pointed the finger at the United States and Europe and sparked considerable controversy when he said last week that the global economic crisis was caused by "white people with blue eyes."

White House officials have downplayed the disagreements.

"I think going into the summit, there's a broad consensus among the G20 as to what needs to be done in these areas to restoring growth and a regulatory reform efforts," said Froman. "Between the stimulus program, the financial stability program and its various elements and the regulatory reform agenda that [Treasury] Secretary [Timothy] Geithner laid out this week, the U.S. has taken significant steps on each of the elements of the overall agenda."

Poll: Americans Increasingly Confident About Economy

"The president and America are going to listen in London, as well as to lead. Many of the things that we've done over the past couple of weeks, and particularly just in the past week, demonstrate that America is leading by example," White House press secretary Robert Gibbs said Monday.

An ABC News/Washington Post poll out today shows Americans are increasingly confident about the economy, a potentially persuasive tool for Obama at the G20 summit.

Forty-two percent of Americans now say that the country is moving in the right direction, up from 19 percent before Obama took office in January and 8 percent in October.

Thirty-six percent of Americans still say the economy's getting worse, but that is dramatically lower than the 62 percent who said that in January and a record 82 percent in October.

At the end of the week, Obama will attend a NATO summit that will be jointly hosted by France and Germany. The war in Afghanistan and the situation in Pakistan will be at the top of the president's agenda when he sits down with NATO allies and meets with French President Nicolas Sarkozy and German Chancellor Angela Merkel.

Dennis McDonough, White House deputy national security adviser, said the Obama administration is working with NATO allies to "increase resources both as it relates to troops, but also as it relates to trainers, as it relates to civilian capacity, and as it relates to economic investment and assistance" in Afghanistan.

McDonough said the White House expects "some progress," but cautioned that it is an "ongoing process."

Michael O'Hanlon of the Brookings Institution said it will be a big challenge for the Obama administration to persuade NATO countries to contribute more troops on the ground in Afghanistan.

"They're not going to be doing much. I can predict no more than a few hundred or maybe a couple thousand additional troops at most. It's going to be a big challenge," O'Hanlon said.

Obama Will Meet With Students in Turkey

Obama finishes his trip with a stop in Turkey, a Muslim nation, where he will stress that Turkey is a vital member of the NATO alliance and a close ally of the United States. Relations with Turkey have been strained since the start of the Iraq War in 2003 and administration officials hope the visit will smooth over tensions.

"We share a commitment to democracy, a secular constitution, respect for religious freedom and belief and in free market and a sense of global responsibility," Secretary of State Hillary Rodham Clinton said in early March when she announced the president's stop in Turkey.

In Ankara, Turkey, Obama will meet with President Abdullah Gul and Prime Minister Recep Tayyip Erdogan.

Obama will travel to Istanbul where he will hold a series of meetings with cultural leaders and a roundtable with students. The White House said this roundtable will give Obama a chance to speak to young people in Turkey, across Europe and in Southwest Asia. He will use video technology.

Obama will deliver two major speeches: one in Strasbourg, France, focusing on the trans-Atlantic alliance and another in Prague focusing on proliferation challenges.

They may not all agree with Obama, but world leaders are lining up to meet with him.

In addition to the G20 summit and NATO and EU meetings, Obama goes to Europe with a busy schedule of one-on-one meetings with a host of world leaders including British Prime Minister Gordon Brown, President Dmitriy Medvedev of Russia, President Hu Jintao of China, Prime Minister Manmohan Singh of India, President Lee Myung-bak of South Korea and King Abdullah of Saudi Arabia.

Obama will meet with David Cameron, the leader of the Conservative Party in Britain. And in Prague he will meet with former Czech President Vaclav Havel

ABC News polling director Gary Langer and Sunlen Miller contributed to this report.

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