If comments coming out of Europe today are any indication, the upcoming G20 finance ministers meeting should be entertaining. President Barack Obama was clearly reaching out to conference attendees today when he said that the overall objective for this weekend’s meeting of the G20 finance ministers should be a “concerted action to spur global economic growthâ€Â. Given recent comments however, getting this level of agreement could be difficult.
Tensions have been growing between the US and its major trading partners for several weeks now ever since the contentious “buy America†clause in Obama’s economic stimulus bill first saw the light of day. Canada – which exported over $300 billion or 75% of its total exports to the US in 2007 – was the first to object to what it saw as sanctioned protectionism from the Obama administration and Europe was quick to register disapproval as well. US officials downplayed the significance of the clause but it ultimately passed a Senate vote and remained part of the final bill signed into law by President Obama on February 18th.
In the weeks since the signing – which still remains a sore spot with Canada and Europe – disagreement over the best strategy to attack the ongoing global recession threatens to be the next stumbling block. The US advocates for massive government spending to boost the economy and has spent hundreds of billions so far with much more spending already committed. European leaders have invested as well but at a much slower pace and now wish to adopt a “wait and see†approach before taking on more debt.
Luxembourg Prime Minister Jean-Claude Juncker – who also serves as chair of the Eurogroup countries – made it very clear today that Europe has no intention of following the US model when he said that Europe has already “done what it has needed to do†and further spending at this time is unnecessary.
“Recent American appeals insisting Europeans make an added budgetary effort were not to our liking, given that we are not prepared to go further in the recovery packages we have put forward,” Mr. Juncker said. “We take the view that we don’t need to make a further effort for the moment. We mustn’t pile deficit upon deficit.”
Wow – this guy doesn’t pull his punches. For his part, President Obama remains “optimistic†and conjuring up the spirit of JFK noted, “we are all in this togetherâ€Â.
