In a rare global summit where the U.S. leader is not the center of attention, President Obama leaves Wednesday evening for the Group of 20 summit in Cannes, France, with a diminished international presence and an economic-growth message being drowned out by the scramble to deal with Europe’s unresolved debt crisis.
French President Nicolas Sarkozy and German Chancellor Angela Merkel, not the American president, will be the focus at the meeting of the 20 leading rich and developing nations, and European leaders have been looking in recent days to Beijing, not Washington, as a source of capital.
The summit will begin a week after European leaders agreed on a second bailout plan for Greece and a $1.4 trillion fund to prevent the debt turmoil from spreading to countries such as Italy, Portugal and Spain, though even that plan seems increasingly in jeopardy.
Mr. Obama, grappling with his own unresolved domestic debt issues, has been sending mixed messages from the sidelines, saying he is confident that the European Union has the resources to solve the problem while asserting that the crisis is “scaring the world” because of a lack of decisive action by European leaders.
“There’s certainly concern about U.S. leadership,” said Heather Conley, senior fellow of the Europe program at the Center for Strategic and International Studies in Washington. “European finance ministers have not been fully appreciative of U.S. advice and counsel on how to deal with the crisis because of U.S. domestic challenges. We’re seeing finger-pointing.”
Mr. Obama is making the trip as European Union leaders and world markets confronted a fresh crisis over the Greek government’s surprise announcement that it will hold a popular referendum on the new bailout package.
Markets around the world, including on Wall Street, fell sharply Tuesday amid fears that the proposed vote could scuttle the rescue plan.
White House press secretary Jay Carney said Tuesday that Mr. Obama is still looking to European leaders “to provide a conclusive resolution.”
“It is a European problem that has to be addressed,” Mr. Carney said.
Obama administration officials are discouraging a rescue by China, saying Beijing ought to focus instead on domestic economic policies such as easing the manipulation of its currency.
“Europe has the resources and the capacity to overcome these risks,” said Lael Brainard, undersecretary of the Treasury for international affairs.
She said China and other “emerging economies” would do better to focus on domestic policy, in part, because Europe likely won’t be a source of strong growth.
“It’s very much in China’s own interest, as they know and as you see in their own policies, to shift to domestic consumption-led growth, rather than relying on an outdated growth model based on net exports to advanced economies where demand is likely to be weak for some time,” Ms. Brainard said.
“And the [currency] exchange rate plays the most powerful potential near-term role as a lever in helping that shift.”