ENERGY/ENVIRONMENTAL REGULATION: After having failed to enact large-scale regulatory changes Obama has settled for smaller-bore rules that fill in gaps, for example by reigning in toxic emissions from power plants and by raising fuel-economy standards. He wants to cut $4 billion a year in subsidies for big oil while fostering a revolution in natural gas, wind, solar, and other new technologies.National Journal

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Mexican President Felipe Calderon still clings to the hope that when he convenes the G-20 summit in Los Cabos on Monday, the assembled world leaders will focus on an agenda heavy with green jobs, climate change, and policies for the developing world. But with Greece reeling, Spain tottering, and European instability threatening economic recovery around the world, Calderon might as well throw out the official agenda and be prepared for lots of talk about Europe.

And much of that talk -- some of it in public, even more in private, one-one-one discussions -- will come from President Obama after his Sunday night arrival from Chicago. The stakes couldn't be higher for a president running for reelection. The worsening European instability threatens the already less-than-robust American recovery and, with that, threatens his hopes for a second term.

Calderon this week pleaded with the other leaders not to let what he called "the urgency" of the eurozone crisis "distract our attention from more important details or the most important problems for humanity." But the leaders, who represent 90 percent of the world's gross domestic product, are already distracted.

"The actual agenda will turn out to be very different than the formal agenda," said Domenico Lombardi, an expert on the G-20 and president of the Oxford Institute for Economic Policy. "Last year in Cannes, Greece hijacked that summit. In the end it was all about Greece. Now, in Mexico, it may again be all about Greece, but in a much more alarming way because we are dangerously close to the brink."

Lombardi said the leaders going to Los Cabos, at the tip of the Baja California peninsula, see a broad threat regardless of the outcome of the Greek referendum on Sunday. "Therefore," he told National Journal, "the potential for contagion is much stronger."

Matthew Goodman, who spent three years on the National Security Council staff in the Obama White House coordinating G-8 and G-20 summits and is now at the Center for Strategic and International Studies, said the euro crisis will be "the overwhelmingly dominant topic of conversation" despite professions of "euro fatigue" at the last summit. But he said the president will try to put that discussion in "a broader conversation about global growth, which has many sources of risk or weakness right now. The eurozone is where the risks are concentrated and where there also is weakness. But China is slowing; India is slowing; Brazil is slowing. And the United States is clearly not out of the woods."

On Monday morning, Obama will meet with Calderon before going to the most eagerly anticipated meeting, his first with Russian President Vladimir Putin since the controversial election that returned him to the helm of the Kremlin. Coming amid growing tensions with Moscow over Syria, the session could be the most challenging of the two-day trip for Obama. The two leaders are also expected to discuss Iran. Following that meeting, the actual G-20 summit convenes on Monday afternoon.

On Tuesday, Obama will meet separately with Chinese President Hu Jintao, with the economy, North Korea, and Iran at the top of the agenda. Obama will then hold a press conference before returning to Washington. The White House hope is that he will be able to bring with him a clearer understanding of the next steps to be taken in European capitals. The president wants to hear "more from the European leaders on the progress of their efforts to stabilize their banking system and promote growth," said Mike Froman, the deputy NSC adviser on international economics.

The stakes for the United States couldn't be higher. "Euro-area fragility remains the key risk to our recovery and to the global economy," said Undersecretary of State for International Affairs Lael Brainard. "Europe is our largest export market, so weaker demand in Europe means weaker job growth here at home. European banks are interconnected with financial markets around the world, so volatility in Europe undermines sentiment here at home."

Lombardi, who is also a senior fellow at the Brookings Institution, was blunt about Obama's goals for the Los Cabos summit: "When President Obama walks into the summit room, he will have one priority. And that is the European crisis--avoid spillovers to the U.S. economy that could threaten his chances of getting reelected."

This article is from the archive of our partner National Journal.

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