As he attends the G-20 summit in Cannes, the president has added incentive to prevent European debt from slowing the U.S. recovery
There is no Cannes primary on the U.S. political calendar. But what happens in the south of France over the next two days while President Obama is at the G-20 Summit may have as much to do with his political fate in 2012 as anything happening in Iowa or New Hampshire. From his first meeting with French President Nicolas Sarkozy, which will happen a little after 4 a.m. EDT Thursday, until he departs for home Friday afternoon, the president will be focused on a worsening European crisis that threatens to complicate his own reelection.
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"At this moment, the largest threat to U.S. economic recovery certainly comes from the disorderly unraveling of the European crisis," Domenico Lombardi, president of the Oxford Institute for Economic Policy, told National Journal. Just this week, that unraveling has not been pretty as pessimistic projections on European growth vied with the stunning announcement of a Greek referendum to undo any optimism generated by last week's announcement of a European economic rescue plan.
Lombardi, a former board member of both the World Bank Group and the International Monetary Fund, said the impact of the Greek developments on the already fragile U.S. economic recovery could be stark. "If you think you need to tighten your seatbelt, you are not going to hire more workers. You are not going to go ahead with investment plans and the economic recovery in the U.S. is going to suffer from that and this is just due to the big uncertainty of the Euro crisis."
He predicted an immediate fallout from Europe of "another couple of months of pain, increasing uncertainty, destabilizing effects on the financial markets." This is not news that a president running for reelection wants to hear. And the news didn't get much better Wednesday for the White House, which found itself fending off reports that China will wield more clout at the G-20 meetings because President Hu Jintao will arrive in a better position to offer a financial bailout to Europe than a cash-strapped President Obama could muster. At the White House, press secretary Jay Carney dismissed a potential Chinese offer as "a sideshow," stressing the influence Obama enjoys because of the size of the American economy.
"The United States is still the largest economy in the world," said Carney. "It is still the most powerful nation in terms of its alliances and its influence around the world. And that influence comes in a variety of ways, including the wealth of experience that we have." Repeatedly, he said that Europeans "have the capacity" and the resources to resolve the current crisis, through their own governments or the IMF.