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G-8 leaders put focus on European financial crisis

Prime Ministers, from left, Yoshihiko Noda of Japan, Mario Monti of Italy, and Stephen Harper of Canada, and Presidents Francois Hollande of France and Barack Obama meet on Saturday.

Associated Press

Prime Ministers, from left, Yoshihiko Noda of Japan, Mario Monti of Italy, and Stephen Harper of Canada, and Presidents Francois Hollande of France and Barack Obama meet on Saturday.

CAMP DAVID, Md. — Leaders of the world's economic powers say Germany should balance its push for European fiscal austerity with doses of stimulus spending to avoid a financial calamity with global repercussions.

The Group of Eight leaders, meeting over the weekend at the Camp David presidential retreat, are trying to figure out how to tame Europe's debt crisis while also increasing the demand for goods and spurring job growth.

In talks Saturday, President Barack Obama and leaders of Germany, France, Canada, Italy, Britain, Russia, and Japan were looking to build consensus even though a decisive plan of action seemed out of reach right now.

The G-8 session sets the stage for a far more consequential European summit next week in Chicago where the countries that share the euro as their currency hope to come together on specific steps to fight rising debt while spurring a recovery.

Obama established the tone for the G-8 on Friday after meeting with just-elected French President Francois Hollande, when he said the aim of the summit was to promote both fiscal consolidation and a "strong growth agenda."

The two leaders, Obama said "agree that this is an issue of extraordinary importance not only to the people of Europe but also to the world economy."

In a hint of the pressures facing the leaders, Obama greeted German Chancellor Angela Merkel at Camp David and asked her how she was. Merkel, facing resistance over her austerity push, shrugged.

"Well, you have a few things on your mind," Obama said.

A central economic topic, though hardly the only one confronting Europe, is the fate of Greece. That country is facing the most acute financial crisis of the eurozone and is set to hold elections June 17 to end political deadlock. At issue is whether Greece abandons the euro to escape austerity measures.

Hollande, after meeting with Obama at the White House, said, "We share the same views, the fact that Greece must stay in the eurozone and that all of us must do what we can to that effect."

Also on the agenda is energy as the world looks to the oil markets in advance of fresh penalties set to take effect on Iranian oil exports. While oil prices have been falling, major oil importing countries, including the United States, are keeping a wary eye on prices and keeping open the possibility of tapping their own oil reserves.

For Obama, Europe's fate is critical to his own political survival. An economic recession that spreads to the United States could damage an already slow recovery and boost the argument by his Republican challenger, Mitt Romney, that the U.S. economy needs new leadership.

G-8 leaders put focus on European financial crisis 05/19/12 [Last modified: Saturday, May 19, 2012 11:44pm]

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