Leaders from the Group of Eight nations opened two days of economic and security discussions by considering ways to keep Iran from gaining nuclear weapons capability and to promote peaceful political transition in Syria, according to a U.S. official familiar with the talks.
The G-8 summit, hosted by President Barack Obama at the presidential retreat in Camp David, Maryland, began last night with a dinner discussion of security matters ahead of meetings planned for today on the global economy, said the official, who briefed reporters on condition of anonymity.
The talks so far have been “frank and useful,” Obama said as he welcomed the leaders in remarks televised from Camp David this morning.
“We are addressing here the two biggest threats to all our economies and that is of course the eurozone crisis but also the very high oil prices that translate into high prices at the pumps,” U.K. Prime Minister David Cameron said today after meeting with Obama.
Sense of Urgency
The leaders are “making progress on both,” Cameron said. “Particularly on the euro zone, what is required is a sense of urgency and then clear actions for strong banks, strong deficit reduction plans,” he told reporters.
Leaders were reserving most of today for talks on how to mix pro-growth policies and austerity measures to manage the Greek and euro-region crises, along with discussions about oil supplies and prices.
Before leaving for Camp David yesterday, Obama called Europe’s debt crunch “an issue of extraordinary importance” to the world economy and said he expected a “fruitful discussion” on how to couple fiscal responsibility with policies that promote growth.
Obama met privately in Washington before the G-8 talks with France’s new President Francois Hollande, who echoed the U.S. president’s position that growth must be a priority along with improved public finances. Hollande said he and Obama “share the same views” that Greece should stay in the euro region “and that all of us must do what we can to that effect.”
Tensions Over Debt
Hollande also met yesterday in Washington with U.K. Prime Minister David Cameron, who urged the French leader to back euro region-wide bonds. Cameron warned Hollande that he’ll veto any attempt to introduce a European Union financial transactions tax.
Friction over how to approach the European debt crisis is shadowing the G-8 talks. Obama and Hollande are urging more emphasis in Europe on pro-growth policies, while German Chancellor Angela Merkel has opposed any measures that might add to nations’ debt burdens.
At the helm of Europe’s biggest economy, Merkel has taken the lead in calling for fiscal discipline to combat the region’s debt crunch.
When Obama greeted Merkel as she arrived at Camp David, she simply shrugged when he asked how she was doing.
“Well, you have a few things on your mind,” Obama told her.
Pressure on Greece
European Union leaders said yesterday they have the tools and the will to protect the euro and combat the bloc’s debt crisis, seeking to reassure G-8 members that are doing enough to contain financial turmoil that has spread from Greece to Ireland, Portugal and Spain.
For now, the EU is “determined to stay the course” and continue its efforts to cut deficits across the 27-nation union, while also honoring commitments made to Greece, European Council President Herman Van Rompuy told reporters yesterday.
“We will do whatever needed to guarantee the financial stability of the euro zone,” said Van Rompuy, who was joined at Camp David by EU President Jose Barroso.
Almost $4 trillion was wiped from global equity markets this month amid speculation that Greece will abandon the euro, while recession and loan losses led Moody’s Investors Services May 17 to downgrade 16 Spanish banks.
Greece is scheduled to hold elections on June 17, with an international rescue and its future as one of 17 nations using the euro at stake. The nation’s credit rating was downgraded one level by Fitch Ratings on concerns that the country won’t be able to muster the political support to meet bailout terms.
Obama and the other G-8 leaders will also assess oil markets and the impact of an EU embargo on Iranian oil that’s set to begin July 1, U.S. National Security Adviser Tom Donilon said on May 17. The U.S. and its allies are weighing the use of strategic oil reserves to protect the global economy in the event the embargo drives up the price of crude.
Crude oil for June delivery fell $1.08 to $91.48 a barrel on the New York Mercantile Exchange, the lowest settlement since Oct. 26. Prices retreated 4.8 percent this week, and are down 7.4 percent this year on concern that Europe’s debt crunch will curb demand.
The International Energy Agency has no definite plan to release fuel from its emergency reserves, David Fyfe, the head of its oil industry and markets division, said at a conference in London yesterday. U.S. officials have repeatedly said no decision has been made on using reserves in the U.S. and Europe, which were last tapped in June 2011 to offset supply disruptions caused by upheaval in the Middle East and North Africa.
Syria, North Korea
The G-8 includes the U.S., Canada, the U.K., Germany, France, Italy, Japan and Russia. The EU also has two seats.
During last night’s dinner, the leaders discussed the status of a six-point peace plan for Syria put forward by United Nations envoy Kofi Annan, the U.S. official said. The G-8 leaders recognized the need to move fast on a political transition from the regime of Syrian President Bashar al-Assad, the U.S. official said.
The meeting participants also affirmed the need for Iran to take concrete steps to show that it’s not pursuing nuclear technology for hostile purposes, and they agreed that North Korea must be dissuaded from taking further provocative actions with its missile and atomic programs, the official said.
From the G-8 meeting in rural Maryland, Obama and other leaders will travel tonight to Chicago for a North Atlantic Treaty Organization summit where a central topic will be a discussion of military issues, including funding and manpower to support Afghanistan after coalition forces leave at the end of 2014.
In a speech yesterday before the G-8 summit began, Obama called for a new phase of African farm aid as 45 companies worldwide including Cargill Inc. pledged more than $3 billion to ease threats to global security posed by scarce nutrition.
The “New Alliance for Food Security and Nutrition” has a goal of pulling 50 million people from poverty in the next 10 years, Obama said.