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Obama's uphill climb at the G-20 summit

The president was once Europe's darling. Now he'll find that the global economic crisis has changed everything.

March 29, 2009|DOYLE McMANUS

WRITING FROM WASHINGTON — The last time Barack Obama went to Europe, he was cheered by 200,000 rapturous Germans. This week, he faces a tougher audience.

Back then, before the economic crisis hit, Obama was the embodiment of Europe's hopes for America, a candidate who promised a new era of racial progress and international harmony. But now, on this trip, President Obama can't just talk about hope and dreams. He has to deliver an unpopular message.

The centerpiece of Obama's journey, his first overseas trip since taking office, is a summit meeting of the Group of 20, the leaders of the world's 20 biggest economies: the United States, Japan, China, the European Union and others that account for about 85% of global economic output.

The goal of Thursday's London summit is to get all those countries working together to pull the world out of its economic slump. But that's easier said than done.

Obama is pushing the others to follow his example and enact big, U.S.-style stimulus packages to pump government money into their economies to create jobs and encourage consumers to spend. But leaders in Germany, the biggest economy in Europe, have made it clear they think that's the wrong course and that they are unwilling to take on massive additional debt.

The other European countries are divided, which, in a European Union that tries to harmonize members' policies, is likely to mean little or no action. Last week, the EU president, Czech Prime Minister Mirek Topolanek, condemned Obama's proposals as "the road to hell." The governor of the Bank of England, Mervyn King, said more mildly that his country couldn't afford further stimulus.

There are several reasons the Germans and others don't want to follow the U.S. path of a big increase in government spending. They point out that their welfare systems' generous unemployment benefits kick in automatically in a recession, making additional stimulus unnecessary. They worry about adding needlessly to their budget deficits. And, some Europeans grumble, this economic crisis was largely made in the U.S.; why should they take risks to solve it?

Those sentiments are a serious problem for Obama.

Yes, the rest of the world blames the U.S. for the crisis. But back home, Obama has to answer to a Congress that will balk if it feels the U.S. is having to prime the pump alone -- especially because the benefits of any U.S. action will be felt around the world. Already, some of the money from his economic recovery program is being used to purchase foreign goods and supply credit to foreign firms. (That's how globalization works.) That may or may not be good economics, but it's not good politics. Obama needs to be able to tell the folks back home that the rest of the world is doing its part to reverse the spiral.

That's why, going into the summit, Obama has publicly urged other nations to embrace bigger stimulus plans. On this page last week, for example, he wrote that "the leaders of the G-20 have a responsibility to take bold, comprehensive and coordinated action," beginning with "swift action to stimulate growth."

That kind of public statement was probably necessary -- both politically and to spur others to action --but it was also risky. If the first summit of his presidency doesn't respond to his call, the gathering is likely to be judged a failure, at least by some.

Treasury Secretary Timothy F. Geithner, who knows something about the perils of high expectations from his struggle to launch a bank rescue plan, has sensibly been trying to lower the bar. In New York last week, Geithner said agreement on new stimulus measures wasn't necessary. "We'll have different ideas on how best to do it," he said. "The important thing is for people to say they'll do what it takes."

The leaders at the summit will almost certainly do that. They'll release a handsome statement promising to coordinate their policies, even if they haven't succeeded at doing it yet. And there will be actions they agree on. They'll promise to keep trade talks going, even though they're mostly treading water. And they'll agree to increase their funding for developing countries -- a good move that has less to do with charity than economic strategy (poor countries are consumers too) and international security (think Pakistan).

Once the one-day summit is over, they'll keep working at it. Obama will continue pushing for more stimulus spending, and if Europe's recession gets any deeper, German Chancellor Angela Merkel may finally yield to his pleas. The participants will agree to work on tighter regulation of financial markets -- on a nation-by-nation basis, though, not a French-style global authority. They'll keep talking to try to stave off protectionist impulses in all their countries. And, outside the G-20, Obama will be asking his new partners for big increases in economic aid to Afghanistan and Pakistan. None of this will come easy.

Last July, when Obama was Europe's darling, it was possible to imagine his first international summit as president would be a victory lap. But that was a different world. Obama has spent his first two months in Washington discovering the limits of his power to compel the Senate to support his domestic proposals. This week, he'll take the campaign onto the world stage -- and find that his mandate is no more potent overseas.


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