G8 leaders to focus on Europe's woes

CAMP DAVID, Maryland: The leaders of powerful nations of the world were to focus on economic woes of Europe on Saturday after President Barack Obama threw his weight behind the French calls for more growth policies .

Obama has paved the way for a G8 summit grumpy here by forging an alliance with the new French president Francois Hollande on the need to shake Europe return to growth.

Fearing the economic crisis in Europe is about to get worse - with dangerous repercussions for the U.S. economy and perhaps his reelection chances - Obama weighed, risking the ire of German Chancellor Angela Merkel who has defended an austerity-first approach.

Shortly before hosting the leaders Merkel and others to retire the famous Presidential outside Washington, Obama noted Friday that the events in Europe held "great" importance to the United States.

The G8 should discuss "a responsible approach to fiscal consolidation that is coupled with a strong growth agenda," he said.

To kick off the summit, without a tie Obama hosted the leaders shortly after sunset on Friday, the threshold of his wooden hut for an informal dinner that lasted over two hours.

But the atmosphere dressed down does little to ease tensions.

In what could have been a telling moment, Obama praised Merkel's Laurel Lodge with a hearty: "How've you been?" When the answer came: a shrug and pursed lips, Obama acknowledged "Well, you have something on your mind."

European public leaders have tried to smooth the splits within the G8, with emphasis on austerity and recovery should not be mutually exclusive.

"We need to take measures for growth while maintaining our focus in terms of putting our fiscal house in order. From the stability and growth go hand in hand, they are two sides of the same coin," the head of the European Commission Jose Manuel Barroso said before the summit.

But with the budget crisis in Greece apparently approaching denouement, these good words can be put to the test.

The recent clobbering the Greek parties that the austerity measures as part of the back country of 173 billion euros (U.S. $ 220 billion) rescue sparked a new round of market panic and left of the effort two years to avert a default on the support of Greek life.

Greek fresh polls are scheduled for June 17, but there is no certainty that the reformers will win painful, and already the Greeks were nervous taking money from bank accounts.

The markets are already betting that if the anti-austerity parties win, the rest of Europe will turn off the spigot of rescue, a decision that would force a Greek default and would probably indicate an output of the euro area.

So far, EU leaders insist that Greece has to meet its obligations, an attitude that will probably take place before the elections. But a line is whether the mixing bailout of Greece should be reviewed.

Diplomats said major new initiatives are unlikely to come from the G8 summit, but the political calculus for Obama intervention advice from Europe to policies conducive to growth.

Commission President Barroso said that there was a growing consensus around the idea of ​​specific investments financed by the European common bonds - a measure he said would satisfy the need for austerity and recovery.

"We need to complete the fiscal consolidation efforts for reforms with investment," he told AFP on the sidelines of the summit.

G8 leaders will hold their main discussions of the fate of Europe Saturday the performance of the collection of rustic cabins at Camp David in the Catoctin Mountains in Maryland forest.

The discussions at dinner Friday night with a strong focus on the ongoing bloodshed in Syria and Iran's nuclear program dispute before negotiations between world powers and the Islamic Republic in Baghdad later this month.

A senior U.S. official, there was broad agreement on the need for a political transition in Syria, where a revolt and government repression has left 12,000 dead.

But as the UN weighs sending more military observers in the country, it was unclear whether Russia and the rest of the G8 had bridged differences over the fate of the regime of Bashar al-Assad.

There was also discussion on North Korea, which is feared will launch a new nuclear test and Myanmar, after Obama eased investment restrictions of the United States on Thursday.

Diplomats said the weekend will also see an agreement on how to help newly free Arab nations to recover state assets transferred abroad by members of previous regimes.

As usual, the security around Camp David was tight. According to the Defense Command North American Aerospace, the U.S. military planes were scrambled twice Friday night to intercept two Cessna aircraft in the vicinity of the U.S. presidential retreat.

Both landed in neighboring Pennsylvania, and their pilots were questioned, NORAD said.

The G8 club of developed nations including Britain, Canada, France, Germany, Italy, Japan, Russia and the United States.

- AFP / ir