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Obama ‘confident’ EU can steady economy

U.S. sees move by China on currency

- The Washington Times - Friday, November 4, 2011

CANNES, France — President Obama said Friday the world's 20 leading economies have "moved the ball forward" on Europe's debt crisis in spite of failing to agree on how to boost the International Monetary Fund's lending power for a potential rescue of nations in danger of default.

"I am confident that Europe has the capacity to meet this challenge," Mr. Obama said as the G-20 summit here wrapped up. "Make no mistake, there is more hard work ahead. But our European partners have laid a foundation on which to build."

Leaders of the world's biggest economies were trying to strengthen the IMF as they scrambled to help Europe contain its debt crisis from spreading. A deal to bail out Greece nearly unraveled this week and is still on shaky ground.

But the G-20 leaders failed to agree on how to increase the firepower of the IMF, while agreeing its resources should be boosted beyond the currently available $390 billion.

"It's important that the IMF sees its resources reinforced," European Commission President Jose Manuel Barroso told reporters.

Mr. Obama said the EU has "identified the need" to boost capital and create a "firewall" to prevent other countries besides Greece from defaulting.

"They're going to have a strong partner in us," Mr. Obama said, citing "additional tools" the IMF can use to stabilize confidence in markets.

"I believe they have that strong commitment to the Euro and the European project," he said.

Addressing the unemployment rate in the United States, which lowered slightly to 9.0 percent Friday, the president said he isn't thinking about how the jobless rate might affect his reelection chances.

"The least of my concerns is the politics of a year from now," Mr. Obama said. He added that the new jobs report is further proof of the need for Congress to pass elements of his $447 billion American Jobs Act.

He said lawmakers should "think twice before they vote no again" on aspects of the legislation.

"There's no excuse for inaction," globally or back home, Mr. Obama said. "We're going to keep on pushing."

As the G-20 summit concludes Friday, China is agreeing in principle to ease up on the deliberate manipulation of its currency, a senior Obama administration official said.

A statement from the leaders of the world's industrialized and large developing economies will include "the recognition by China … of allowing the exchange rate to move according to market forces," the U.S. official told reporters, speaking on condition of anonymity. He added that the Obama administration views the development as "very encouraging."

The U.S. Treasury Department periodically issues a report declaring that China's currency is undervalued, which drains dollars and jobs from the American economy. The weak economy has spurred action by both parties in Congress for sanctions and other moves if China fails to act.

The Senate last month passed legislation that would would make it more difficult for the U.S. government to avoid retaliating against China. But House Speaker John A. Boehner, Ohio Republican, called the measure "dangerous" and said the Obama administration should act more forcefully as a matter of policy. Critics say the move could spark a trade war between the world's two biggest economies.

White House officials said before the conference they intended to press the Chinese and rally world support on the subject, saying a rise in the value of the Chinese yuan would boost domestic demand in China and provide a boost to the world economy.

The senior U.S. official in Cannes did not say what leverage other countries would have to compel China to act.

As if to underscore the pervasive gloom of the two-day summit, Mr. Obama concluded his time in France while standing in the pouring rain with French President Nicholas Sarzoky at an outdoor ceremony to honor both nation's troops for liberating Libya from the regime of Col. Moammar Gadhafi.

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