Obama under fire at G20 summit

November 11, 2010 | 15:38
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President Barack Obama defended US efforts to promote growth Thursday as he faced a test of his leadership mettle at a G20 summit heralded by fierce global criticism of American economic policy.

Entering the most contentious economic summit yet of his crisis-scarred presidency, Obama was playing the unusual role of lightning rod for foreign anger soon after he was weakened at home by a mid-term election defeat.

The president vowed to continue efforts to ignite the slumbering US economic engine, despite lashing foreign critiques of the Federal Reserve's plan to pour $600 billion into the US economy.

"In a prudent, stable way, we want to make sure that we are boosting growth rates at home as well as abroad," Obama told reporters ahead of a summit that is exposing widely differing views on how to sustain the global recovery.

China has led criticism of the Fed's move, branding it indirect currency manipulation, returning fire after complaints from US officials at what they argue is the artificially low value of the Chinese yuan.

But Obama and Chinese President Hu Jintao kept the dispute, and other disagreements over trade, under wraps in a brief appearance before reporters as they met in a Seoul hotel.

"The Chinese side stands ready to work with the US side to increase dialogue, exchanges and cooperation so that we can move forward the China-US relationship on a positive, cooperative and comprehensive track," Hu said.

Obama meanwhile said that given the power of both nations, it was important they kept lines of communication open.

"As two leading nuclear powers obviously we have (a) special obligation to deal with nuclear proliferation," Obama said.

"As two of the world's leading economies we have a special obligation to deal with ensuring strong balance and sustained growth."

Despite the disagreements threatening to derail the G20 summit, Obama predicted at a press conference the final communique would contain an agreement from nations on "mechanisms" to ensure balanced and sustainable growth.

Obama, who has tried most of the stimulus options in his presidential policy toolbox, launched a staunch defence of the Fed while he was in India, arguing that a stronger US rebound was vital to global economic health.

He reinforced the message in a letter to other G20 leaders released as he flew into Seoul Wednesday.

"A strong recovery that creates jobs, income and spending is the most important contribution the United States can make to the global recovery," Obama's letter said.

The US central bank's plan, dubbed quantitative easing, is aimed at getting more cash into the pockets of companies, consumers and homeowners by making borrowing cheaper, but there are concerns it will fuel inflation.

Even before the summit, Obama was dealt a disappointment as he and South Korean President Lee Myung-Bak failed to solve disputes on auto and beef trade that are holding up a long-delayed US-South Korea free trade pact.

The leaders instructed their teams to keep working on the deal, while Obama said he was "confident" the pact, which must be ratified by legislatures in both countries, would be agreed in the end.

Obama was also due to meet German Chancellor Angela Merkel, who set the stage for their talks by making clear she would not accept any "political" numerical limits on trade surpluses -- an idea the United States had earlier championed.

Germany has also heavily criticised the Fed's stimulus plan.

Obama's talks with Hu took place during a four-nation tour of Asia designed to expand US geopolitical influence and alliances -- a strategy seen in some quarters as a hedge against China's mounting economic and diplomatic clout.

But Obama rejects the idea that Washington wants to contain China's rise, and says it in fact welcomes it.

The president opened Veterans Day on Thursday by meeting US troops in Seoul, and warned nuclear-armed North Korea that Washington would never waver in support of South Korea.

And he called on Pyongyang to show "seriousness of purpose" before six-party talks on the Stalinist state's nuclear programme could resume.

AFP

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