WASHINGTON (AP) — A year after President Barack Obama made an emphatic pitch to Europe’s economic powers to focus more on economic growth than austerity, much of the eurozone remains mired in or near recession. Obama’s appeals have had mixed results in softening the demands on some of the most debt-ridden European nations to cut their spending.
Still, the region’s crisis is no longer perceived as an urgent threat to the global economy, and while the US still wants Europe to temper the debt trimming and increase global demand, Obama is not expected to be as insistent with other leaders of the Group of Eight industrial nations when they meet in Northern Ireland next week.
Last year, the G-8 leaders assembled at the Camp David, Md., presidential retreat in the aftermath of European elections that represented a revolt against the austerity measures pushed by German Chancellor Angela Merkel. When Obama greeted Merkel and asked how she had been, the German leader merely shrugged. “Well, you have a few things on your mind,” Obama replied then.
These days, the furor has died down, high-debt nations have been given more time to work on their fiscal cuts, and even the language has changed from “austerity” to “growth-oriented structural reforms.”
“Relative to last year, things are somewhat better in that the European situation is more contained,” said Matthew Goodman, a former Obama international economics adviser now at the Center for Strategic and International Studies. “The risks that people were worried about have been somewhat diminished.”
The economic picture remains bleak. The eurozone economy contracted about 0.8 percent in the first quarter, compared with the same period in 2012. Among the G-8 members, Italy and France saw their gross domestic product shrink 2.4 percent and 0.4 percent respectively over the first quarter of 2012. Germany, the region’s largest economy, and Britain saw modest growth in the first quarter, but still sharply lower than other G-8 members.
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Russia saw annual growth of 1.6 percent in the first quarter, the US grew at 2.4 percent, Canada at 2.5 percent and Japan at 4.1 percent.
“The European Central Bank continues to be too tight,” said Robert Shapiro, a former commerce undersecretary who also advised former President Bill Clinton. “The debate over austerity is far from over in England or in Germany. Moreover, right under the surface of all this remains the sovereign debt crisis. It has not been resolved.”
As a result, administration officials and former government economic advisers say Obama and his aides will still push European nations to moderate their austerity programs of spending cuts and tax increases in favor of more stimulus to boost growth and counter the high unemployment that still afflicts many countries in Europe, particularly Spain and Greece.
Germany and Britain have resisted some of the US entreaties, arguing that heavily indebted European nations must trim deficits to restore market confidence and lower government borrowing costs.
