Obama Presses EU Leaders on Debt Crisis
President Barack Obama is pressing European Union leaders to keep moving quickly to resolve the two-year-old euro-zone debt crisis before it hobbles the global economy.
Obama began a White House summit this morning with European Council President Herman Van Rompuy, European Commission President José Manuel Barroso and foreign-affairs chief Catherine Ashton.
Iran’s nuclear program, strengthening exports and investments, Middle East peace prospects, terrorism and cyber crime also are on the agenda for annual meeting.
The president’s message is that “Europe needs to take decisive action, conclusive action, and it has the capacity to do so,” White House spokesman Jay Carney said.
The summit comes as European finance chiefs are set to meet this week to discuss a rescue plan, and days ahead of a Dec. 2 report by the U.S. Labor Department on the nation’s unemployment rate for November. The rate for October was 9.0 percent.
About $4.6 trillion was wiped from the value of global equities this month on mounting concern that Europe’s debt crisis is spreading.
Moody’s Investors Service said today the “rapid escalation” of the crisis threatens all of the region’s sovereign ratings, and the Organization for Economic Cooperation and Development said doubts about the survival of Europe’s monetary union has caused global growth to stall.
“The euro-area crisis represents the key risk to the world economy,” the Paris-based OECD said. Government bond yields for both Germany and France, Europe’s two largest economies, climbed last week as a German bond auction failed to get bids for 35 percent of the 10-year debt on offer.
News of a possible framework for a rescue plan helped push global stocks higher for the first time in 11 days. The MSCI All-Country World Index added 3.1 percent at 11:06 a.m. in New York, snapping its longest slump since 2008, and the Standard & Poor’s 500 Index rallied 3 percent.
The euro strengthened 0.8 percent to $1.3339. The yield on the 10-year German bund advanced four basis points, with the similar-maturity Treasury yield jumping seven points.
Obama has been calling on European governments to act decisively on a plan to address the crisis. Leaders must summon the “political will” among the 17 nations that use the euro to take steps to ensure fiscal discipline while stabilizing markets, Obama said Nov. 4 in France as the leaders of the G-20 ended a summit.
Van Rompuy and Barroso are top leaders of European institutions having influence over a final resolution, though France and Germany, the largest European economies, are critical to any success.
Obama has spoken frequently with German Chancellor Angela Merkel and French President Nicolas Sarkozy, and today’s White House meetings gave him a chance to further increase the pressure. Neither head of state is attending today’s summit.
Carney said the European crisis is a reminder that the global economy is interlinked and the U.S. must do its part as well to help growth. He said the president’s push to extend a temporary cut in the payroll tax is one way to make sure the U.S. recovery continues.
Economists from Morgan Stanley, UBS AG, and Nomura International Plc say governments and the European Central Bank must step up their crisis response.
“Skepticism has grown that euro-area policy makers can deal effectively with the key challenges they face,” Pier Carlo Padoan, the chief economist at the Paris-based OECD, said today as he cut forecasts for European and global growth.
The financial crisis in such countries as Greece and Italy has eroded the euro’s stability and disrupted global markets. France and Germany, Europe’s largest economies, want changes in treaties to ensure improved fiscal discipline.