EU and US top officials are set to have ‘strategic’ discussions on the global economy and eurozone debt crisis at the upcoming EU-US summit in Washington next week (28-29 November), EU sources said in advance of the meeting.
European Council President Herman Van Rompuy and European Commission President José Manuel Barroso will hold talks with US President Barack Obama on issues ranging from the global economy, the situation in North Africa, Iran and bilateral economic ties.
“We expect to have strategic discussions which will be the continuation of the ones that took place at the G20 in Cannes,” said an EU official.
The world's leading economies on 17 October in Cannes pressed European leaders to act decisively to resolve the eurozone's sovereign debt crisis, as the bloc's indecision was endangering the world economy.
Speaking to a small group of journalists, US ambassador, William Kennard, said that the sovereign debt crisis in the eurozone will take centre stage as it “affects us all so profoundly.”
Kennard said Obama would offer any advice he could, but insisted it was ultimately a European crisis. “It is a crisis that Europe has to solve on its own and it has the resources to do so,” said the ambassador. Washington has made some suggestions over the course of the crisis, “but those suggestions I think are better made privately.”
To solve the sovereign debt crisis Europe had to build a "more significant" firewall, recapitalising its banks and dealing with its weaker economies, Kennard argued.
“Obviously, in the depths of our crisis, we were able to use the Fed in ways that are different from the way Europe is able to use the ECB - that’s a very fundamental difference in our structure and it’s playing out in this crisis clearly,” he said trying to offer an explanation of why the US is better off than the eurozone.
According to Philip Whyte, senior research fellow at the Centre for European Reform in London, the eurozone is in no worse economic position than the US: its public finances are in better shape than the US’s and its overall level of private sector debt is actually lower. But the eurozone’s structure makes it more fragile monetary union than the US.
The US ambassador said that Washington is “watching carefully” at what the European Central Bank’s next moves.
From the EU side, there seems to be anticipation of defining more concrete and constructive measures on how to kickstart recovery. “We expect a discussion to see what margins we both have on rebuilding economic growth,” an EU official said, stressing that the transatlantic economic partnership is a key driver of global prosperity.
The EU and US are each other’s biggest trade and investment partners. The volume of trade in goods and services taken together amounted to about €667.8 billion in 2010, up from €610 billion in 2009. Large as it is, this is far outweighed by the stocks of investment on both sides, which constitute the most significant element of our economic relationship. In 2009, the EU had more than €1trillion of direct investment in the US, comparable to the one of the US in the EU.
The US ambassador conceded that the uncertainties looming over the eurozone do hold back investors and may hurt the economic recovery even further.
Other issues on the agenda of the EU-US summit are also committed to ensure a positive outcome of the Durban conference on climate change, which begins the same day as the Washington summit. Leaders are expected to reaffirm their commitments made at the Copenhagen and Cancun conferences in 2009 and 2010, and coordinate efforts on establishing a new green climate fund to help poor countries to deal with the effects of climate change.
The 'Copenhagen Accord', agreed at in the Danish capital in December 2009, included a pledge by developed countries to raise $100 billion per year by 2020 to help poor countries fight climate change and adapt to its inevitable consequences.
Meeting the following year in Cancún, the 190 nations involved in the UN talks made progress on the establishment of a Green Climate Fund to deliver climate cash to developing countries.
MEPs last week called on a more ambitious US commitment to achieving progress at the forthcoming Durban conference, and urged the US Senate to avoid passing a bill that calls for a ban on US airlines taking part in the EU Emissions Trading Scheme.
EU leaders will also share views on foreign policy issues, including how best to contribute to the development of democracy and prosperity in European neighbourhood, including North Africa and the Middle East and the promotion of their common values in other regions of the world.
The EU-US summit takes place at a time when Egypt elections might be delayed as unrest and anti-military protests across the country continue to grow.
Kennard stressed the EU and the US will discuss at how best they can help. “The EU and the US have been offering help and resources. But the Egyptian government has been keeping us at arm’s length. They see it as their revolution,” Kennard added.