U.S. President Barack Obama says the world’s leaders have “made important progress” in stablizing the global economy and that he is confident European leaders will be able to resolve the continent’s debt crisis.
Obama told reporters Friday at the end of the Group of 20 summit in Cannes, France, that “more hard work” remains to solve the European debt problems. But he said European leaders had “laid a foundation” toward resolution of the crisis with last week’s debt-relief plan that cuts Greek debt, recapitalizes banks and increases the continent’s bailout firewall to deal with future emergencies.
Now, he said, the European plan “just has to be carried out.”
The U.S. leader acknowledged, however, that the U.S. economy is “underperforming.” He said that the U.S. recognizes that as the world’s largest economy, “the most important thing we can do is to get our own economy growing faster.”
He praised China for agreeing at the summit to take additional steps to boost its own domestic economy, in an effort to trim its large foreign trade surpluses, which has resulted in a huge trade deficit with the U.S.
Earlier, the G20 leaders said the resources of the International Monetary Fund need to be increased to help curb the European debt crisis, but failed to agree how to do that. The shape of any additional aid for the IMF remained uncertain at a time when some of the world’s largest economies, such as the U.S. and China, are facing their own economic difficulties.
Efforts to contain the European governmental debt crisis remained at the forefront on the second and final day of the G20 discussions, even after Greek Prime Minister George Papandreou on Thursday dropped his plan to hold a referendum on the week-old European debt-relief agreement. Under pressure from the U.S. and emerging economies, Italy agreed that the IMF would monitor implementation of its austerity measures aimed at keeping it from needing a bailout.
Thursday’s talks were largely overshadowed by Greece’s hesitancy to abide by the terms of the financial rescue package. European banks plan to forgive $140 billion in Greek debt in exchange for the Athens government’s agreement to adopt years of austerity measures that are hugely unpopular in Greece.
Late Thursday, French President Nicolas Sarkozy again urged Greece to accept the deal.
“I have admiration for Greece and its people. I have old family ties there, and in no way would I want to give the impression that we are interfering in their domestic affairs. But on the other hand, this is about the defense of the euro and the defense of Europe – and that’s our duty. For us, the red line is very simple. Europe and the euro are our homeland – and that has to be defended,” he said.
Earlier this week, Papandreou caused global financial panic by announcing a nation-wide vote on the bailout plan. He backed off his call for the vote after Greek opposition parties finally agreed to back the rescue package.
Sarkozy and German Chancellor Angela Merkel have warned that Greece will not receive “one more cent” of the next $11 billion disbursement of its rescue loan scheduled for December 4 unless it implements the austerity measures.
Without the funds, Greece risks a catastrophic debt default within weeks, putting at risk its membership in the 17-member bloc of nations that use the common European currency.