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G-20 leaders strike delicate balance

‘Violent agreement’ addresses cutting debt, aiding recovery

- The Washington Times - Sunday, June 27, 2010

Leaders of the world's 20 most powerful economies said this weekend that they must control deficits in the long run but not stifle a nascent economic recovery in the short term, in what President Obama described as "violent agreement" on principles.

And speaking to American reporters at the end of the Group of 20 summit in Toronto and after bilateral meetings with a half-dozen leaders, Mr. Obama said he and his allies share the same interest in standing up a successful government in Afghanistan.

Six months into his troop surge and several days after Mr. Obama replaced his top military commander in Afghanistan, the president said the going is rough but said the U.S. has "got a vital interest" in preventing a return to a pre-Sept. 11 situation in Afghanistan.

"This is going to be tough, but what I expect is that by the end of this year, we will have seen progress on the strategy that was laid out, we will conduct a full review, those things that are not working we will fix, those things that are working, we will build on," he said.

He said the U.S. will have to provide assistance "for a long time to come."

The G-20 summit followed the Group of Eight summit of the world's eight largest economies on Friday and Saturday, also in Canada. The leaders here all agreed that the G-20 has now surpassed the G-8 as the premier international forum for cooperation on the economy and other multilateral challenges.

Heading into the G-20, some European leaders, most notably German Chancellor Angela Merkel, said the risk from piled-up debt was now more pressing than the sluggish economy.

German officials' strong warnings prompted Mr. Obama to note Sunday that German fiscal plans are actually about comparable to what Mr. Obama has already proposed for the U.S. in terms of pushing spending cuts to later years.

"If you actually look at their plans, they're no more front-loaded than ours are," Mr. Obama said.

The U.S. budget deficit hit a record $1.4 trillion in fiscal year 2009 and is expected to be near that in 2010, though the long-term budget Mr. Obama submitted to Congress in February showed the deficit dropping to about $727 billion in 2013 before rising again.

In the summit's joint statement, the leaders left room for both points of view, though they did set targets for the advanced economies to cut their budget deficits in half by 2013.

"Strengthening the recovery is key. To sustain recovery, we need to follow through on delivering existing stimulus plans, while working to create the conditions for robust private demand," the leaders said in their communique. "At the same time, recent events highlight the importance of sustainable public finances and the need for our countries to put in place credible, properly phased and growth-friendly plans to deliver fiscal sustainability, differentiated for and tailored to national circumstances."

Mr. Obama said he warned his fellow leaders that they can no longer count on the U.S. running giant trade imbalances.

"After years of taking on too much debt, Americans cannot, and will not, borrow and buy the world's way to lasting prosperity," he said. "No nation should assume its path to prosperity is paved with exports to the United States."

This weekend he also said he wants to take care of outstanding issues on the U.S.-South Korea free-trade agreement, signed in 2007, and have it finalized by the time he visits that country in November.

But that adds another contentious issue to an already full agenda, and is likely to further alienate parts of his political base who are wary of expanded free trade, particularly with the U.S. economy already so sluggish.

On Afghanistan, Mr. Obama laid out a vision for what the people of that country deserve, including basics like electricity and being able to get goods to market.

Speaking earlier in the day on ABC's "This Week," CIA Director Leon E. Panetta said the U.S. has the right strategy, though he acknowledged "some serious problems" with the country.

"It's harder, it's slower than I think anyone anticipated. But at the same time, we are seeing increasing violence," Mr. Panetta said.

He said the Taliban is "engaged in greater violence" now than when Mr. Obama took office, and said they are stronger now in some ways, but weaker in other ways - including having some of their leadership killed or captured.

He also said that only between 50 and 100 members of al Qaeda remain in Afghanistan.

At his press conference in Toronto, Mr. Obama said that doesn't mean the mission is accomplished and said the U.S. still has an interest in making sure Afghanistan doesn't deteriorate back to a pre-Sept. 11 situation.

Some Democrats in Congress have urged the president to withdraw troops now, while others worry that his stated timetable of beginning to withdraw troops in July 2011 will slip. Top Republicans, meanwhile, argue that a withdrawal date is unwise.

Mr. Obama acknowledged that debate, but said his focus is on making sure his current strategy is successful.

But last week's leadership change - he relieved Gen. Stanley A. McChrystal of command in Afghanistan and tapped Gen. David H. Petraeus to replace him - has left top lawmakers wondering whether the civilian leadership also needs reshuffling.

Speaking on the Sunday talk shows, Senate intelligence committee Chairwoman Dianne Feinstein, California Democrat, and Sen. Lindsey Graham, South Carolina Republican and member of the Senate Armed Services Committee, said this is likely Mr. Obama's last chance to get the strategy in Afghanistan correct and that he must give Gen. Petraeus the latitude he needs.

"You put the general in; he should make the call. If he can't work with the ambassador, the ambassador should be changed," Mrs. Feinstein said on "Fox News Sunday."

Gen. McChrystal and his staff had been critical of the civilian leadership, including Ambassador Karl W. Eikenberry and Richard C. Holbrooke, the State Department's envoy to the region, who seem to have strained relationships with Afghan President Hamid Karzai.

"I think we put all our eggs in the Petraeus basket at this point," Mrs. Feinstein said.

Other Democratic senators, though, said Mr. Obama has expressed confidence in the team he has now, including Mr. Holbrooke and Mr. Eikenberry.

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