President Obama heads to Europe next week for a G20 summit on the global economy. The World's Matthew Bell reports on what could come out of the meeting.
This text below is a phonetic transcript of a radio story broadcast by PRI's THE WORLD. It has been created on deadline by a contractor for PRI. The transcript is included here to facilitate internet searches for audio content. Please report any transcribing errors to theworld@pri.org. This transcript may not be in its final form, and it may be updated. Please be aware that the authoritative record of material distributed by PRI's THE WORLD is the program audio.
KATY CLARK: I'm Katy Clark. This is The World. Barack Obama used part of his news conference last night to call for coordinated international action on the financial crisis. And he's sure to repeat that message when he goes to London next week for a meeting of the world's twenty most important economies. But as The World's Matthew Bell reports, President Obama's likely to run into resistance from a very important bloc of countries.
MATTHEW BELL: If you add up the economies of the 27 member states of the European Union, you get the largest economy on earth – even bigger than the US. The Czech Republic currently holds the rotating presidency of the European Union. That's why comments from the Czech Prime Minister today are sure to irk the Obama administration. Mirek Topolanek condemned US Treasury Secretary Timothy Geithner, saying the American stimulus campaign is a way to hell. This is just the kind of attitude that President Obama warned against during last night's news conference.
PRESIDENT OBAMA: All of us are going to have to take steps in order to lift the economy. We don't want a situation in which some countries are making extraordinary efforts and other countries aren't, with the hope that somehow the countries that are making those important steps lift everybody up.
BELL: Economics expert Sebastian Mallaby of the Council on Foreign Relations explains the Europeans' way of thinking.
SEBASTIAN MALLABY: They think that, you know, debt is quasi-immoral. They don't want to try and spend their way out of a crisis nor do they want to have aggressive actions by their central bank. So you get into what looks to me, at least, sort of danger repeating all the mistakes of the 1930's in the US, of refusing to use government measures to get out of this crisis. And I think that's a huge mistake.
BELL: One reason the Europeans are afraid of stimulus spending is because they really fear inflation, says Dean Baker of the Center for Economic and Policy Research.
BAKER: The other is that unemployment realistically does not have the same devastating impact in Europe as it does in the United States. It's not a shame to be unemployed – it doesn't mean you're in poverty. It doesn't mean you go without healthcare. So it's not as bad for a country like Germany or France to have 9 or 10 percent unemployment as it would be in the United States.
BELL: So looking ahead to the G-20 summit in London next week, does that mean that US and European goals are at odds?
ROSECRANCE: No, I don't think it does, because you have to look at this as short-term, long-term.
BELL: Richard Rosecrance is an International Relations expert at Harvard's Kennedy School of Government. He says take Germany, Europe's biggest economy, for example.
ROSECRANCE: We do have some differences in terms of what you should do in the very short term. But I think if the Germans think we're just going to let it go and not come back to fiscal sobriety, I think they're wrong. I mean, there is very, very strong emphasis to do that because it's useful for the world for us to do that, but it's also useful for us in the longer term. We do indeed have to do that.
BELL: The host of the G-20 summit will be British Prime Minister Gordon Brown. Brown was in New York today, where he said that world leaders are determined to do whatever it takes to restore economic growth.
BROWN: I think the most important thing however is you're seeing a determination of people coming together. We are building for the first time not just a global economy but a truly global society.
BELL: The Prime Minister played down the differences between the US and Europe on stimulus spending. Brown also dismissed recent comments from the head of Britain's central bank. Mervyn King said he believed the British government should be careful about its plans for stimulus spending, because it's pushing up the country's debt. That was another reminder that all those presidents and Prime Ministers heading to London – and this includes Barack Obama, of course – have political and economic realities to think about. And those realities will impact their approach toward fixing the global economic slump. For The World, I'm Matthew Bell.
transcript
