US denies economic rift with Europe

By AFP

May 28, 2010 Updated May 28, 2010 at 5:40 PM EST

The White House Monday denied a rift with Europe over whether economic stimulus or regulatory reform offers the best path to revival ahead of a G20 summit in London next month.

"Our efforts at the G20 in London will focus on a number of subjects, both financial regulation and economic stimulus, largely because there isn't one single solution to those problems," White House spokesman Robert Gibbs said.

Washington is pressing its transatlantic allies to emphasize stimulus. But the European Union has failed to forge a common approach, and some EU leaders led by France are pressing for a comprehensive rewrite of global regulation.

President Barack Obama believes that new regulation is needed to prevent a repeat of the present crisis in the future, and stimulus is required to get the economy moving now, Gibbs told reporters.

"So I don't think there's any rift at all," he said.

However, finance ministers from the 16 euro countries Monday rejected the US calls for bigger pump-priming measures, their chairman Jean-Claude Juncker said.

"The recent US calls on Europe for an additional budgetary effort do not suit us," Juncker, who is prime minister and finance minister of Luxembourg, told reporters in Brussels after the eurozone meeting.

Heading into the Brussels talks, German Finance Minister Peer Steinbrueck also resisted the US calls.

"We're not planning on any additional measures," the minister from Europe's largest economy said. "We should concentrate on measures that have already been decided."

Interviewed in Monday's Financial Times, Obama's top economic advisor Larry Summers urged world leaders to focus on boosting world demand ahead of the G20 summit on April 2.

Summers, who heads the White House's National Economic Council, said there was a need for "extraordinary public action" and urged leaders to take coordinated steps to pump more money into the global economy.

"It is really the universal demand agenda," the former Treasury secretary said.

The United States is banking on a 787-billion-dollar stimulus plan to drag the world's biggest economy out of its deepest recession in decades.

Meanwhile, the 27-nation EU has committed to economic stimulus measures in 2009 and 2010 worth only 400 billion euros (505 billion dollars), equivalent to 3.3 percent of the bloc's gross domestic product.

In a weekend interview with The New York Times, Obama said he expects to have "all the pillars in place" this year for a US economic recovery.

"How long it will take before recovery actually translates into stronger job markets and so forth is going to depend on a whole range of factors, including our ability to get other countries to coordinate and take similar actions," he said.

Obama added: "Part of what you're seeing now is weaknesses in Europe that are actually greater than some of the weaknesses here, bouncing back and having an impact on our markets."

But the president has also emphasized the need to update withered government regulation of Wall Street after blaming a "complete lack of regulatory oversight" for contributing to the economic malaise.




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