US will not help pay for Europe’s debt woes

A man checks stock indexes on a screen of a bank in Milan, Italy Mon­day. For the sec­ond time in as many mar­ket days, Italy paid sharply higher bor­row­ing rates in an auc­tion Mon­day, as investors con­tin­ued to pres­sure the eurozone’s third largest econ­omy to come up with reforms urgently. (Asso­ci­ated Press | Luca Bruno)

JULIE PACE

Asso­ci­ated Press

WASHINGTON — Pres­i­dent Barack Obama said Mon­day the United States stands ready to do its part to help Europe with its deep­en­ing debt cri­sis, even as the White House ruled out any finan­cial con­tri­bu­tions from U.S. taxpayers.

Mean­time, a top Euro­pean offi­cial offered his assur­ances to Obama and the Amer­i­can peo­ple that Europe’s lead­ers fully under­stood the mag­ni­tude of the cri­sis. But Euro­pean Com­mis­sion Pres­i­dent Jose Manuel Bar­roso warned that deci­sions on how to solve the eco­nomic woes could take time.

The annual meet­ing between U.S. and Euro­pean Union offi­cials came amid grow­ing fears over the future of the euro. Experts say that with­out dras­tic action, the euro could be days away from col­laps­ing, a sce­nario that could cause more finan­cial dam­age to the already shaky Amer­i­can economy.

While Obama offered no specifics on how the U.S. may be will­ing to assist Europe, he said fail­ing to resolve the continent’s debt cri­sis could dam­age a U.S. econ­omy sad­dled with slow growth and 9 per­cent unemployment.

“If Europe is con­tract­ing, or if Europe is hav­ing dif­fi­cul­ties, then it’s much more dif­fi­cult for us to cre­ate good here jobs at home,” Obama said at the con­clu­sion of the day-long summit.

While Obama has offered sup­port to his Euro­pean peers, the U.S. believes the Euro­peans have the finan­cial capac­ity to solve the debt cri­sis on their own.

But some U.S. allies, includ­ing Fin­land and the Nether­lands, have called for the Inter­na­tional Mon­e­tary Fund to be bol­stered with more cap­i­tal so that it could in turn help stem Europe’s debt cri­sis from deep­en­ing and spreading.

The U.S. is the single-biggest stake­holder in the IMF. And ear­lier Mon­day, White House spokesman Jay Car­ney said the IMF has sub­stan­tial resources already.

“We do not in any way believe that addi­tional resources are required from the United States and from Amer­i­can tax­pay­ers,” Car­ney said.

Euro­pean lead­ers are set to meet Dec. 9 to dis­cuss next steps in tack­ling the finan­cial cri­sis. New ideas were cir­cu­lat­ing Mon­day for how to finally cap the debt woes that began in Greece two years ago and have spread to other larger economies, most notably Italy.

One idea gain­ing momen­tum, was a rad­i­cal pro­posal in which coun­tries that use the com­mon cur­rency would cede con­trol of a big chunk of their bud­gets to a cen­tral author­ity. Some say the pro­posal would be a big leap toward a United States of Europe, a move that could greatly enhance Euro­pean sta­bil­ity, but at the cost, crit­ics say, of national sov­er­eignty and demo­c­ra­tic accountability.

Another plan being aired in the face of fierce Ger­man resis­tance is for the eurozone’s six triple A rated nations to pool their resources through a joint bond to prop up some of the sin­gle cur­rency bloc’s most indebted mem­bers. Ger­many, the EU’s rich­est mem­ber, rejects the idea because it fears it would be tapped for the lion’s share of the bailout

Back in Wash­ing­ton, Bar­roso said Europe’s lead­ers are tak­ing strong steps to solve what he called an unprece­dented situation.

“We are absolutely seri­ous about the mag­ni­tude of the chal­lenges,” he said. “You have to under­stand that some­times some deci­sions take time.”

Car­ney said that Obama, along with Trea­sury Sec­re­tary Tim­o­thy Gei­th­ner, would con­tinue to stay in close con­tact with Euro­pean lead­ers, includ­ing Ger­man Chan­cel­lor Angela Merkel and French Pres­i­dent Nico­las Sarkozy. Vice Pres­i­dent Joe Biden will travel to Greece later this week to meet with new Prime Min­is­ter Lucas Papademos, who took office ear­lier this month.

While Monday’s meet­ing between Obama and Euro­pean Union lead­ers cen­tered on the global econ­omy, there were also dis­cus­sions on sup­port­ing democ­racy in the Mid­dle East and North Africa, coop­er­a­tion on coun­tert­er­ror­ism and trans-Atlantic law enforce­ment, and Iran.

Posted by AP News on Nov 28 2011. You can follow any responses to this entry through the RSS Feed. Comments can be made below.