Barack Obama: Europe faces tough decisions

Barack Obama on European debt crisis: "The solutions are hard, but there are solutions"

European leaders must make difficult decisions to steer the eurozone away from crisis, US President Obama says.

Speaking at the White House, Mr Obama said the US would support Europe as it implemented the hard solutions needed to solve the ongoing debt crisis.

He said a deep new recession in Europe would have an impact on the US economy.

Greece's future in the eurozone was a matter for the Greek people, he said, but "further hardship" must be expected if the country chose to leave the euro.

Greeks will go to the polls on 17 June to try and end a political impasse that eurozone leaders say is harming Greece's ability to tackle its economic crisis.

Meanwhile, Spain's government has sought to downplay rumours that it will request a bailout for its troubled banks from Europe as early as Saturday.

'Hard' solutions

Outlining a series of "specific steps" needed to take to ensure stability within the eurozone, the president was at pains to say he would not "scold" Europe.

President Obama says he doesn't want to scold, but it certainly sounded like a stern lecture. This was an unscheduled news conference and he kicked it off with a long and detailed warning about the urgent need for action by European leaders.

It is clear now that the presidential election will take place against a poor economic background which may get worse before November. Mr Obama is telling the American people it is Europe's fault.

The subtext is that part of the fault is not following his policies of saving weak banks and stimulating growth. But this isn't all party politics. There is genuine frustration that Europe's leaders never get the message.

Today has been typical. There were initial reports that Spanish banks would ask for a bailout. Then that was firmly denied. Then it was said they might, on Monday. Or perhaps Saturday.

Mr Obama's view is that what is needed is firm action to save the banks and that it should be done as a piece of political theatre that shocks confidence back into the markets. He may have to wait a long time before timid incremental dithering is replaced by bold and decisive action.

Mr Obama said European leaders needed to stabilise the continent's financial system and inject capital into weak banks "as soon as possible".

"The solutions are hard, but there are solutions," Mr Obama said, saying the US was offering advice, but that "these decisions are fundamentally in the hands of Europe's leaders".

This is not the first time Mr Obama has sounded a note of impatience towards European leaders, the BBC's Washington correspondent Paul Adams notes.

The US president said several times that the sooner they acted, the quicker people and markets would regain confidence.

Former Obama economic chief Larry Summers told the BBC on Thursday that Europe had not acted quickly or strongly enough, suffering from a "deep and profound and continuing failure of realism" on the part of its leaders.

Paris to Pittsburgh

Mr Obama also reprised his calls for the US Congress to pass the remaining parts of his domestic jobs plan, in an effort to strengthen the US economy against possible shocks from Europe.

Speaking to reporters at the White House, Mr Obama said the European crisis "matters to us, because Europe is our largest economic trading partner".

"If there's less demand for our products in places like Paris or Madrid, it could mean less business for manufacturing in places like Pittsburgh and Milwaukee."

Mr Obama spoke amid rising concerns in the US that the economy is being affected by the situation in Europe.

"Local and state government hiring is going in the wrong direction," Mr Obama said, "The problem is that it requires Congress to take action."

He said the legislative body should act to increase hiring in the public sector as well as in the construction industry.

But a remark that the private sector was "doing fine" was quickly seized upon by his Republican rivals.

"For the president of the United States to stand up and say the private sector is doing fine is going to go down in history... as an extraordinary miscalculation," presumptive Republican nominee Mitt Romney said during a campaign stop in Iowa.

The Republican National Committee immediately put out a web ad that portrayed Mr Obama as out of touch.

The president later sought to take the sting out of the Republican response, saying that it was "absolutely clear that the economy is not doing fine".

He said despite "good momentum" in the private sector, growth rates in the public sector were falling behind.

With the presidential election five months away, analysts are openly querying whether underwhelming recent economic data - including weak job growth - is related to the ongoing problems in Europe.

During a press conference after Mr Obama's remarks, House Speaker John Boehner said the president should quickly extend expiring tax cuts in order to create jobs.

Earlier, Mr Obama said the policies his Republicans opponents have pursued "would add weakness to the economy".

More on This Story

Global Economy

More US & Canada stories

RSS

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.