WASHINGTON — As President Obama heads for his second economic summit in three months, lingering skepticism about U.S. leadership threatens to produce a policy stalemate that could undercut prospects for recovery at home and abroad.
Behind a veil of traditional diplomatic courtesy, leaders of the other wealthy economies are all but certain to resist any major new steps to stimulate global economic activity. That reality is reflected in Obama's announced intention to emphasize initiatives on food security instead of more crucial issues like stimulus spending or jobs.
And the president will have to work hard behind the scenes to bolster confidence in the dollar and American corporations as safe places to invest. China and other countries hold huge quantities of Treasury notes and other dollar investments; any hint that they might begin cashing out those holdings could have devastating consequences from Main Street to Wall Street.
"It's a tricky and dangerous time in the sense that institutions haven't caught up with global realities," said Steven Schrage, an international business expert at the Center for Strategic and International Studies, a nonpartisan think tank in Washington.
Fresh from a trip to Russia, the president will travel to central Italy today to meet with leaders of the Group of 8 wealthy nations.
"I think he goes to the G-8 in an extremely strong position," said Richard Gowan, associate director of the Center on International Cooperation at New York University. "They will be looking to him for leadership," he said of the other heads of the G-8: Britain, Germany, France, Italy, Canada, Japan and Russia, as well as the U.S.
Translating that strength into a unified effort to keep pushing for economic recovery is the challenge -- both in Italy and beyond. And it remains to be seen how forcefully the president will push his leadership.
At Obama's first economic summit in London in April, he won praise for deftly engaging other leaders on divisive issues, but faced none-too-subtle demands for U.S. action on a financial crisis that most foreign leaders looked at as primarily "made in America."
This time, Obama can point to passage of a massive domestic stimulus package, a potentially far-reaching proposal for tighter regulation of the American financial system, a climate change bill and other steps toward putting the nation's house in order.
