Washington — President Obama expressed confidence that countries in the eurozone, which are coping with a currency and debt crisis that has rattled world markets, will take “bold and decisive action” toward greater fiscal consolidation, adding that the continent “remains one of the wealthiest, most productive regions of the world.”
Speaking June 19 at the conclusion of the Group of 20 (G20) summit in Los Cabos, Mexico, Obama said that following his conversations with European leaders at the G20 and over the past few months he is confident that they “are very much committed” to Europe’s economic and monetary union.
“These are advanced economies with extraordinarily productive people. They’ve got a particular challenge that has to do with a currency union that didn’t have all the best bells and whistles of a fiscal or a monetary union, and they're catching up now to some of those needs. And they just need the time and the space to do it,” he said.
The current crisis is a combination of factors, including some member countries that had undisciplined fiscal practices and public debt, and others, such as Spain, “whose problems actually arose out of housing speculation and problems in the private sector that didn’t have to do with public debt,” he said.
The president said there is “no doubt” that all European countries “recognize the need for growth strategies inside of Europe that are consistent with fiscal consolidation plans,” and he said their leaders “understand the stakes,” and “understand why it’s important for them to take bold and decisive action.”
“I’m confident that they can meet those tests,” Obama said, and he urged them to “work through all the politics to get it done” in order to send a strong signal to “impatient” and “risk-averse” world markets.
The president said Europe has the resources to solve its crisis, and mainly needs “a sense of specifics and the path” to the solution, which in turn will help “build confidence and reverse psychology” for global investors.
“What I’ve encouraged them to do is to lay out a framework for where they want to go in increasing European integration, in resolving the financial pressures that are on sovereign countries. Even if they can’t achieve all of it in one full swoop, I think if people have a sense of where they’re going, that can provide confidence and break the fever,” he said.
Neither the United States nor the G20 can solve Europe’s current challenges, he said, but with Europe being the largest U.S. trading partner, “we have a profound interest in seeing Europe prosper.”