Thursday, March 12, 2009

U.S., European Countries Differ Over Focus of G20 Meeting


European leaders have rejected U.S. President Obama and Treasury Secretary Geithner's calls for the G20 summit to focus on immediate stimulus actions to spur economies. The Europeans would like to focus on putting into place a comprehensive global regulatory structure instead.

The G20 meeting will occur on April 2 in England. After U.S. leaders voiced hope that G20 members would agree to commit at least two percent of their GDP to stimulus measures, European leaders bluntly rejected that goal. In particular, Angela Merkel of Germany and Nicolas Sarkozy of France have agreed to pursue a common regulatory agenda rather than agree to more stimulus measures at the summit. The European Commission Chief and the chair of eurozone ministers also stated that more stimulus measures were not suitable for the economies of Europe, which are seeking to rein in public spending rather than commit more money.

President Obama clarified that the U.S. was not going to seek a specific "economic commitment" or pact, and that he was also open to debating regulatory reform ideas. But a fresh commitment to more stimulus measures globally remains a U.S. goal for the summit. Secretary Geithner has also called for IMF funds to be increased to $500 billion, a sum larger than that favored by Europeans.

European Union countries face budgetary constraints due to E.U. rules. Recent spending has pushed these countries past the E.U.-allowed limits. While the U.S. has focused on domestic stimulus measures aimed at sparking consumption, its European counterparts have focused to a greater extent on assisting industry and infrastructure.

Japan's finance minister threw his weight behind the U.S. focus for the G20, giving the U.S. push the backing of the two largest economies in the world. The minister stated that Japan is already planning to spend nearly two percent of its GDP on stimulus measures.

1. While the U.S. and Europe are both being heavily affected by the financial crisis, how are their economic and budgetary conditions different and how might this contribute to different emphases at the G20 summit?

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