Bloomberg News

Euro Strains Overshadow Obama Hosting G-8, NATO Meetings

May 17, 2012

Europe’s financial crisis and its political fallout are shaping back-to-back international summits hosted by President Barack Obama on the global economy and military cooperation, including funding for postwar Afghanistan.

Leaders in the Group of Eight -- with the notable exception of Russian President Vladimir Putin -- convene tomorrow and May 19 at Camp David, Maryland, near Washington. Then, most will fly to Chicago, Obama’s hometown, for a North Atlantic Treaty Organization meeting.

Both are venues for Obama, who is seeking re-election in November, to show U.S. audiences he is playing a leadership role on foreign policy. Still, Obama may have little say over how allies address the euro region crisis, including proposals to revive debt-ridden Greece’s economy at the same time its political system is in turmoil over an austerity plan.

The G-8 “is a euro-crisis summit -- it will be dominated by the crisis,” said Heather Conley, director of the Europe Program for the Center for Strategic and International Studies, a Washington policy institute.

Before Camp David, Obama, will sit down privately at the White House with France’s new President Francois Hollande, who may help Obama press Europe for more growth-focused policies and may complicate Obama’s case for continued European commitments in Afghanistan.

Hollande, who campaigned as a “normal” guy, defeated incumbent Nicolas Sarkozy on May 6 in a campaign in which he called for a balance between stimulus measures and austerity. He also called for pulling French forces from Afghanistan a year earlier than the U.S. was counting on.

Merkel Meeting

Hollande and German Chancellor Angela Merkel met this week before traveling to the U.S. and said they would consider measures to promote economic growth in Greece if Greeks commit to austerity requirements they are under in order to stay in the euro.

White House press secretary Jay Carney said yesterday that “we have been saying for some time now that growth has to be a factor in Europe.”

Carney said while “we’re not prescribing actions” for Europe, Obama favors “a balanced approach that includes austerity, dealing with fiscal challenges as well as the need to grow the economy.”

The G-8 discussions are expected to cover how to deal with Greece’s fiscal and political crisis and bailout; African food security programs; economic growth in the U.S., China and Japan; trade, energy and climate change; and collective approaches toward regimes in Syria, Iran and North Korea.

Greek Elections

The G-8 includes the U.S., Canada, the U.K., Germany, France, Italy, Japan and Russia. The European Union also has two seats. This is the first G-8 for Hollande, Italian Prime Minister Mario Monti and Japan’s Prime Minister Yoshihiko Noda.

Greece moved this week to call new elections for next month, after political gridlock left the nation without a government since inconclusive May 6 elections. The country is on its second bailout from the European Union.

Putin, inaugurated earlier this month, is skipping the G-8, sending Russian Prime Minister Dmitry Medvedev in his place. Putin is at odds with the U.S. on issues ranging from missile defense to the approach toward Syria and Iran.

Fiscal woes also are casting a shadow over NATO funding. The European alliance’s modernization is at risk as well as commitments that individual countries will make to continue training and assistance programs to Afghan forces after 2014, when the Western-led alliance forces plan to depart.

Hollande’s Promise

Hollande’s approach to the NATO summit will determine whether France remains aligned with the U.S. on “major strategic issues,” such as Afghanistan, said R. Nicholas Burns, former undersecretary of state for political affairs during the George W. Bush administration, who co-authored an Atlantic Council report on the future of NATO.

Hollande may find himself under pressure from the U.S. and other NATO allies not to pull French troops from Afghanistan by the end of 2012, as he promised during the campaign.

France now has 3,308 troops in Afghanistan, according to information provided by the International Security Assistance Force on its website.

At the summit in Chicago, NATO leaders are to review plans to give full responsibility for security to Afghan forces by the end of 2014, and also discuss and define the future role of the alliance and its partners in that country.

Withdrawal From Afghanistan

Financing the stand-alone Afghan force has taken on greater urgency as Western allies head for the exit after more than a decade of warfare, the longest combat operation in NATO’s history.

Afghan soldiers and police officers totaled about 337,000 in mid-March and are scheduled to reach 352,000 this year. The coalition has agreed with Afghan leaders to begin paring the force after 2014 to about 230,000.

Maintaining those numbers of Afghan security forces would cost about $4 billion, with the U.S. seeking $1.3 billion from allies and with the Afghanistan government contributing about $500 million annually, Assistant Secretary of State Philip Gordon told the Senate Foreign Relations Committee on May 10.

Over the past month, since defense and foreign ministers met at NATO headquarters in Brussels in preparation for the summit, several countries have announced financial pledges for Afghan security forces, including Britain with 70 million pounds ($112 million) and Germany with $190 million a year.

In the past year, NATO nations have begun reducing their military budgets, including the U.S. which is slated to cut $487 billion over the next ten years, said Burns, who is a board director at the Atlantic Council and a professor at Harvard University.

The U.S. military may face another $500 billion in cuts if Congress and the White House do not agree by the end of this year on other ways to reduce the budget deficit.

“The cohesion of the Atlantic community is under strain from economic crisis, political paralysis and the emergence of new global powers in Asia,” Burns said in the Atlantic Council’s report.

To contact the reporters on this story: Margaret Talev in Washington at mtalev@bloomberg.net; Roxana Tiron in Washington at rtiron@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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