Coping with shaky oil markets, the leaders set the stage for a united release of world oil reserves to balance any disruption in world markets when tough new sanctions are imposed on Iran's exports because of its disputed nuclear program. The leaders said they were ready to take “appropriate action” to meet any shortages.
The mere preparation to release oil reserves could help calm markets and ensure that oil prices, which have been dropping, don't climb again and anger consumers as U.S. elections approach.
The Group of Eight summit includes leaders of the United States, Japan, Britain, Germany, France, Italy, Canada and Russia.
A joint summit statement reflected how urgently the countries must contain a financial crisis that could spread from the euro zone to the United States and infect the rest of the global economy. They declared unanimity in ensuring that Greece, which is crippled in debt and politically gridlocked, remains as part of the 17-member euro currency union.
“The leaders here understand the stakes,” President Obama said in summing up a packed, unusually intimate day of world talks. “They know the magnitude of the choices they have to make and the enormous political and economic and social costs if they don't.”
Chancellor Merkel said growth and deficit-cutting reinforced each other and that everyone around the table agreed. “That is great progress,” she said. As for promoting growth, she said investments under consideration include research and development, Internet networks and infrastructure. But she said “this doesn't mean stimulus in the usual sense.”
U.S. officials agreed, saying growth measures that the Europeans might pursue don't all require outright public spending, and could be in the form of public-private partnerships or in initiatives designed to loosen credit. And the leaders stayed away entirely from the world “stimulus,” which has taken on an unpopular political connotation, including in the United States.
“The global economic recovery shows signs of promise, but significant headwinds persist,” said G-8 leaders.
The tension between austerity and growth – whether to slash debt by cutting budgets or use public money and other means to help spur economic growth – was the backdrop as President Obama welcomed an emerging push for a balance between the two.
He seized the opportunity to cast the debate in terms favourable to his own re-election, closing the summit with the steps he took to right the U.S. economy and his economic vision for a second term. He said he was confident Europe could get on a path to recovery as has the United States.
“We know it is possible in part based on our own experience here,” he said. “In my earliest days in office, we took decisive steps to confront our own financial crisis.”
President Obama chose Camp David in part to encourage a freewheeling discussion out of sight of most media and potential protests, allowing the leaders to sit around a cabin table to negotiate terms, or stroll through the leafy paths for chats that seemed a world away from the typical summit convention-hall setting.
It all came before President Obama lead a much larger NATO summit in Chicago, Illinois, on Sunday and Monday that will be heavily focused on the Afghanistan war.
The drag of a euro-zone crisis comes as joblessness and doubts about a life of better opportunities are already the chief concerns for American voters.
In their united view, the leaders conceded some points about Chancellor Merkel's push for austerity, saying budget deficits must close.
Their joint statement added that budget cutting should “take into account countries' evolving economic conditions and underpin confidence and economic recovery.” That suggested a willingness to let indebted countries take more time to reduce their deficits in line with euro-zone rules in order to lessen the deadening impact of cuts on the economy.
It also called for “investments in education and in modern infrastructure,” which would involve more government spending. That approach also meshes exactly with President Obama's campaign-year strategy for accelerated economic growth, which is to keep spending money on core priorities while taking on the debt through cuts and higher taxes.
The statement of support for Greece remaining in the euro underlines the unpredictable damage to the global financial system that could come from a Greece departure. It follows a week of increasing speculation that Greece might not be able to stay the course, and in which a top European Union official said officials were working on emergency plans in case of a Greek exit. That country is facing the most acute financial crisis of the euro zone and is set to hold elections June 17 to end political deadlock.
At issue is whether Greece abandons the euro to escape austerity measures. Meanwhile, Europe's woes have given shudders to Wall Street.
The Fitch ratings agency dropped Greece to the lowest possible grade for a country not in default Thursday. Fitch said Greece's departure from the euro “would be probable” if elections next month do not reverse political trends there, which have brought in politicians opposed to the terms of Europe's bailout.
Intellpuke: You can read this article by Associated Press writers Jim Kuhnhenn and Anne Gearan, reporting from Camp David, Maryland, in context here: www.theglobeandmail.com/news/world/obama-touts-emerging-consensus-on-reviving-europes-economy/article2438123/