Home' Trinidad and Tobago Guardian : June 16th 2013 Contents A38
Sunday Guardian www.guardian.co.tt June 16, 2013
WASHINGTON---A year after President Barack
Obama made an emphatic pitch to Europe s eco-
nomic powers to focus more on economic growth
than austerity, much of the eurozone remains
mired in or near recession. Obama s appeals have
had mixed results in softening the demands on
some of the most debt-ridden European nations
to cut their spending.
Still, the region s crisis is no longer perceived as
an urgent threat to the global economy, and while
the US still wants Europe to temper the debt trim-
ming and increase global demand, Obama is not
expected to be as insistent with other leaders of
the Group of Eight industrial nations when they
meet in Northern Ireland this week.
Last year, the G-8 leaders assembled in the US
in the aftermath of European elections that rep-
resented a revolt against the austerity measures
pushed by German Chancellor Angela Merkel. When
Obama greeted Merkel and asked how she had
been, the German leader merely shrugged. "Well,
you have a few things on your mind," Obama replied.
These days, the furor has died down, high-debt
nations have been given more time to work on their
fiscal cuts, and even the language has changed from
"austerity" to "growth-oriented structural reforms."
"Relative to last year, things are somewhat better
in that the European situation is more contained,"
said Matthew Goodman, a former Obama inter-
national economics adviser now at the Center for
Strategic and International Studies. "The risks that
people were worried about have been somewhat
The economic picture remains bleak. The euro-
zone economy contracted about 0.8 per cent in
the first quarter, compared with the same period
in 2012. Among the G-8 members, Italy and France
saw their gross domestic product shrink 2.4 per
cent and 0.4 per cent respectively over the first
quarter of 2012. Germany, the region s largest econ-
omy, and Britain saw modest growth in the first
quarter, but still sharply lower than other G-8
members. Russia saw annual growth of 1.6 per cent
in the first quarter, the US grew at 2.4 per cent,
Canada at 2.5 per cent and Japan at 4.1 per cent.
"The European Central Bank continues to be too
tight," said Robert Shapiro, a former commerce
undersecretary who also advised former president
Bill Clinton. "The debate over austerity is far from
over in England or in Germany. Moreover, right
under the surface of all this remains the sovereign
debt crisis. It has not been resolved."
As a result, administration officials and former
government economic advisers say Obama and his
aides will still push European nations to moderate
their austerity programmes of spending cuts and
tax increases in favour of more stimulus to boost
growth and counter the high unemployment that
still afflicts many countries in Europe, particularly
Spain and Greece.
Germany and Britain have resisted some of the
US entreaties, arguing that heavily indebted Euro-
pean nations must trim deficits to restore market
confidence and lower government borrowing costs.
"I think, I hope, that the Obama administration
realises that its policy messages about cooling it
on the austerity and start stimulating haven t worked
in Europe," said Heather Conley, director of Europe
programmes for the Center for Strategic and Inter-
national Studies in Washington who worked in
president George W Bush s State Department. "And
this has been actually an area of growing tensions
underneath the surface. It s private. They don t
allow these to come more publicly, but it s really
been quite, you know, a point of contention."
Japan s growth, however, stands as a potential
example of the benefits of raising domestic demand.
Questions remain whether the efforts of Japanese
Prime Minister Shinzo Abe are sustainable. So-
called Abenomics have also raised worries among
US manufacturers that Japan s real goal is to weaken
the yen as a way to gain trade advantages.
Administration officials say they believe that
they can make a compelling case by using the
United States as an example of how to help the
economic recovery without deep budget cuts.
The Obama administration responded to the
recession with a massive stimulus package in 2009.
Officials argue that increased economic activity
and a turnaround in the housing industry have
helped increase revenues and lower the deficits.
European growth less
urgent for US at G8 summit
In this May 19, 2012, file photo, President Barack Obama, third from left, participates
in a luncheon at the G-8 Summit at Camp David, Maryland. From left are, French
President Francois Hollande, Benin President Yayi Boni, Ghanaian President John
Atta Mills, British Prime Minister David Cameron, Eleni Gabre Madhin, CEO of the
Ethiopia Commodity Exchange, Russian Prime Minister Dmitry Medvedev, Indra
Nooyi, CEO of PepsiCo. AP PHOTO
Links Archive June 15th 2013 June 17th 2013 Navigation Previous Page Next Page