World
3:00 pm
Thu November 3, 2011

Greek Drama Dominates Talks At G-20 Summit

Originally published on Thu November 3, 2011 7:37 pm

Greece's decision to scrap a referendum on new austerity measures added a note of urgency to the G-20 summit meeting that began in Cannes, France, on Thursday. President Obama and other G-20 leaders are trying to prevent the Greek debt crisis from spreading to the rest of Europe and beyond.

Before the G-20 summit formally got under way, Obama met privately with the leaders of France and Germany — Europe's two biggest economies. They're also the architects of a continental debt rescue plan.

Appearing with German Chancellor Angela Merkel, Obama said curing Europe's debt problem is vital for the health of the economy back home.

"This is going to be a very busy two days," Obama said. "Central to our discussions at the G-20 is how do we achieve greater global growth and put people back to work."

The debt rescue plan announced last week was cast in doubt on Monday, when Greek Prime Minister George Papandreou called for a public referendum on the austerity measures that plan would require in his country.

After furious pressure at home and from France and Germany, Papandreou backed down Thursday. His government is still on shaky ground, though, and faces a confidence vote Friday night.

U.S. Concern Over Broader Problems

U.S. officials are already looking past the political drama playing out in Athens. Whatever happens in Greece, Mike Froman of the National Security Council stressed, Europe must protect its larger economies such as Italy and Spain from a downward spiral of debt.

"On the Greek issue itself, let me just say the situation there underscores the need to move rapidly towards a firewall that is sufficiently robust and effective in ensuring that a crisis does not spread from one country to another," Froman said.

In other words, if you can't fix Greece's debt problems, at least quarantine them.

Europe is already facing sluggish growth or a mild recession in the months ahead. And London-based analyst Jan Randolph of IHS Global Insight says a runaway debt contagion would make matters worse, and not just for the Europeans.

"Just as we were affected here in Europe by the subprime and the financial crisis of 2008, the tables have turned really," he said. "Sentiment spreads very quickly like a virus if there's risk, and certainly risk is being emanated out of Europe to the rest of the world."

U.S. Playing A Limited Role

The Obama administration has said repeatedly that Europe must take the lead in addressing its debt problems. China could also play a role by investing some of its large cash reserves in a financial firewall.

"Everybody has a stake here in the success of a plan that can deal with the eurozone crisis, and different nations are going to play different roles in supporting that effort," said Ben Rhodes, the deputy national security adviser.

The United States' own role does not include any direct financial support for Europe. But the National Security Council's Froman insists that doesn't signal a retreat for the U.S.

"Our ability to contribute, our ability to lead and our ability to influence the outcome of these sorts of issues is not tied necessarily to having the American taxpayer pay for every problem," said Froman.

Indeed, after meeting Thursday morning with Obama, French President Nicolas Sarkozy, the host of the G-20 summit, said the U.S. still had an important role to play.

"We need the leadership of Barack Obama," Sarkozy said. "We need the solidarity and support of the United States of America."

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Transcript

GUY RAZ, HOST:

This is ALL THINGS CONSIDERED from NPR News. I'm Guy Raz.

ROBERT SIEGEL, HOST:

And I'm Robert Siegel.

The Greek economic drama took new turns today. First, the prime minister dropped a plan to hold a referendum on the eurozone bailout for his country. And now he's hinting that he might be willing to step down. The referendum had threatened Greece's future in the eurozone, and it has dominated talks between President Obama and other leaders at the G-20 Summit that began in France today.

NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: Before the G-20 summit got under way, President Obama met privately with the leaders of France and Germany, Europe's two biggest economies. They're also the architects of a continental debt rescue plan.

In a photo op with German Chancellor Angela Merkel, Mr. Obama said curing Europe's debt problem is vital for the health of the economy back home.

PRESIDENT BARACK OBAMA: This is going to be a very busy two days. Central to our discussions at the G-20 is how do we achieve greater global growth and put people back to work.

HORSLEY: The debt rescue plan, announced last week, was cast in doubt on Monday, when Greek Prime Minister George Papandreou called for a public referendum on the austerity measures the plan would require in his country. Today, after furious pressure at home and from France and Germany, Papandreou backed down. His government is still on shaky ground, though, and facing a confidence vote tomorrow night.

U.S. officials are already looking past the political drama playing out in Athens. Whatever happens in Greece, Mike Froman of the National Security Council stressed Europe must protect its larger economies such as Italy and Spain from a downward spiral of debt.

MIKE FROMAN: On the Greek issue itself, let me just say that the situation there underscores the need to move rapidly towards a firewall that is sufficiently robust and effective in ensuring that a crisis does not spread from one country to another.

HORSLEY: In other words, if you can't treat Greece's debts, at least quarantine them.

Europe is already facing sluggish growth or a mild recession in the months ahead. And London-based analyst Jan Randolph of IHS Global Insight says a runaway debt contagion would make matters worse and not just for the Europeans.

JAN RANDOLPH: Just as we were affected here in Europe by subprime and the financial crisis of 2008, the tables have turned, really. Sentiment spreads very quickly like a virus if there's risk. And certainly, risk is being emanated out of Europe to the rest of the world.

HORSLEY: The Obama Administration has said repeatedly Europe must take the lead in addressing its own debt problems. China and could also play a role by investing some of its large cash reserves in a financial firewall.

Here's Deputy National Security Advisor Ben Rhodes.

BEN RHODES: Everybody has a stake here in the success of a plan that can deal with the eurozone crisis. And different nations are going to play different roles in supporting that effort.

HORSLEY: The United States' own role does not include any direct financial support for Europe. But the NSC's Froman insists that doesn't signal a retreat for the U.S.

FROMAN: Our ability to contribute, our ability to lead and our ability to influence the outcome of these sorts of issues is not tied necessarily to having the American taxpayer pay for every problem.

HORSLEY: Indeed, after meeting this morning with President Obama, the host of the G-20 summit, French President Nicolas Sarkozy, suggested no decline in U.S. stature.

PRESIDENT NICOLAS SARKOZY: (Foreign language spoken)

HORSLEY: We need the leadership of Barack Obama, Sarkozy said. We need the solidarity and support of the United States of America.

Tomorrow, the two presidents will join French and American military forces in a celebration of their alliance and its most recent success in Libya. There, as with the European debt crisis, the United States deliberately tried to limit its role, offering its expertise but not much of its money.

Scott Horsley, NPR news, Cannes. Transcript provided by NPR, Copyright NPR.

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