The crisis in Europe will be at the front and centre of the upcoming G-20 summit in Los Cabos, Mexico. But the major North American partners of the group — the United States and Canada — have also expressed concern about slowing economic growth in emerging economies such as India and China.
Senior US officials said at a briefing in Washington, DC, that while there was no formal bilateral meeting scheduled between President Barack Obama and Prime Minister Manmohan Singh, the two leaders are likely to meet on the sidelines of the G-20 summit. On June 14, Obama and Singh discussed the upcoming meeting in a telephone conversation.
Describing the conversation, Ben Rhodes, deputy national security advisor to the president for strategic communications, said, “I think they’re in broad agreement about the need for steps to promote global growth and European leaders using the G-20 as an opportunity to discuss their plans around the Euro zone. So, I think that call was very much about coordinating efforts leading into the G-20.”
Europe is the US’ largest trading partner, and US officials described the situation there as the “dominant risk to the global economy at the moment”.
“I think the overwhelming focus of this G-20 is to reflect the evolving debate around growth and the critical importance of global growth and recovery. And the European piece is the central piece at the moment in that effort,” said Mike Froman, deputy national security advisor for International Economic Affairs.
US officials made it clear they would want to hear from the four Euro zone leaders who would be at the G-20 summit about efforts to keep the Euro zone intact while tackling the crisis in Greece.
“It’s important to recognise that we are hearing from both our European partners and from the main candidates in Greece, from the Greek people that they are all looking to find a path forward that will keep Greece in the Euro area even as it moves forward reforms,” said Lael Brainard, under secretary of the Treasury for International Affairs. “It’s going to be important for European leaders to set out their broader path to greater banking union. Again, it’s very important to see risk-sharing, backstopping of the banking system to greater fiscal union.”
Canada also believes the Euro zone crisis will be the dominant issue at the G20, especially with Sunday’s election in Greece expected to provide further volatility. But its government, led by Prime Minister Stephen Harper, believes Europe is capable of addressing the crisis on its own. “We’re of the view that Europe, as the richest economy in the world, has the resources it needs to overwhelm this crisis,” said Andrew McDougall, the prime minister’s director of communications.
Both the US and Canada have taken note of signs of slowdown in emerging economies. The US wants major emerging markets, especially China, to take steps to promote growth.
Brainard said, “Many of these countries, such as China, have the fiscal and monetary capacity to take actions to spur domestic demand and to help support global growth. The G-20 will look to maintain momentum on rebalancing demand, which is critical to stronger overall growth. And key, of course, to achieving this, among other things, is for China and other surplus emerging market economies to take fiscal and other measures to support domestic consumption as well as allowing exchange rates to reflect market forces.”
Canada believes barriers to free trade are hurting economic and job growth globally, and will seek commitment from G-20 nations to a free and strong trading system. “Canada remains concerned about the growing protectionism and an increase in trade restrictive measures that have crept into the world trading system since the onset of the global economic crisis,” said McDougall. He pointed to Canada’s trade plans, referring to India as an example of a preferred partner.
“Canada is promoting the most ambitious trade agenda in our history. We are currently pursuing trade agreements with over 50 countries, including Japan, the EU and India,” he said.
Another major highlight at the summit will be the first bilateral meeting between Obama and Russian President Vladimir Putin, in the backdrop of mutual accusations about their countries’ involvement in Syria.
