Obama tells G-20 nations to seal economic recovery
June 18, 2010 "We must act together to strengthen the recovery," Obama said
in his letter to other leaders of the Group of 20 major industrial
countries, written in advance of next week's summit meeting in
Toronto.
But Obama's appeal for unity underscored a number of divisions
that have developed between the major powers. Many European
nations, rattled by the debt crisis that had engulfed Greece, have
started to trim their own budget deficits while China has rejected
calls by the United States to allow its currency to rise in value
as a way to boost sales of American and other foreign products in
China.
Obama referred in an oblique way to those disagreements in the
letter, avoiding mentioning other countries by name.
"Our highest priority in Toronto must be to safeguard and
strengthen the recovery," he said. "We worked exceptionally hard
to restore growth; we cannot let it falter or loose strength now."
Obama called on the other nations to "reaffirm our unity of
purpose to provide the policy support necessary to keep economic
growth strong."
Obama noted in the letter that "significant weaknesses" linger
among the major and developing economic powers. He told his summit
partners "it is essential that we have a self-sustaining recovery
that creates the good jobs that our people need." The White House
released a copy of the letter on Friday.
In the letter, Obama said that the June 25-27 summit should also
focus on efforts to stabilize public deficits in the "medium
term," a reference to the administration's position that
governments need to run huge deficits currently to provide the
stimulus needed to ensure a sustained recovery but then move in
future years to deficit reduction efforts.
But several European nations including Germany, France and
Britain are already moving to attack high deficits in an effort to
calm global financial markets which have stumbled in recent weeks
over concerns that Greece or other highly indebted nations could
default on their loans.
Obama is having a tough time making the argument for increased
deficit spending at home as well. The Senate has blocked a
scaled-down jobs bill with critics complaining that the $120
billion pricetag is still too high at a time when the government's
budget deficit is running above $1 trillion annually.
In his letter to the G-20, Obama said: "I am committed to the
restoration of fiscal sustainability in the United States and
believe that all G-20 countries should put in place credible and
growth-friendly plans to restore sustainable public finances."
"But it is critical that the timing and pace of consolidation
in each economy suit the needs of the global economy, the momentum
of private sector demand and national circumstances."
The recovery from recession in the United States has been
erratic and uneven with the economy not growing fast enough to make
much of a dent in unemployment, which remains stuck near
double-digit levels.
In his letter, Obama also called on his G-20 partners to
promoted "balanced global demand" and said he remained concerned
about the "continued heavy reliance on exports by some countries
with already large external surpluses."
While not mentioning China by name, that comment was an obvious
reference China's trade surpluses and continued resistance to U.S.
demands that it allow its currency, the renminbi, to rise in value
against the dollar.
A stronger renminbi and a cheaper dollar would make U.S. goods
more competitive in China and provide Chinese consumers with
cheaper products. American manufacturers contend that China is
manipulating the value of its currency to gain unfair trade
advantages and some U.S. lawmakers are pushing legislation to
impose stiff penalties on Chinese imports unless Beijing allows its
currency to appreciate.
There had been hopes that China would move on the issue before
the Toronto summit but on Thursday Chinese Foreign Ministry
spokesman Qin Gang told reporters that "we believe it would be
inappropriate to discuss the renminbi exchange rate issue in the
context of the G-20 meeting."
Qin reiterated the government's position that it would gradually
reform its exchange rate policies at a timing of its choosing and
not in response to pressure.