Obama hopeful that European leaders will take steps to rescue financial system

LOS CABOS, Mexico — Amid growing fears that Europe’s debt crisis will further stunt U.S. economic growth, President Obama emerged from two days of talks with world leaders Tuesday expressing cautious optimism that European leaders will take stronger action to rescue their foundering financial system.

Obama acted at times as a mediator during a Group of 20 summit that featured moments of frustration, but White House officials said they are hopeful that a greater consensus has developed around more robust changes in advance of a European summit next week.

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Yet Obama aides offered no examples of specific steps that will be implemented, despite the heavy pressure applied by Obama and other international leaders. And at a news conference after the summit, the president cautioned that the “challenges in Europe will not be solved by the G-20 or the United States.”

“Our friends in Europe clearly grasp the seriousness of the situation and are moving forward with a heightened sense of urgency,” he added.

The leaders of the four European members of the G-20 — Britain, France, Germany and Italy — pledged to work together to ensure that debt-ridden Greece remains part of the euro currency zone; implement stronger integration and safeguards in Europe’s banking system; and take steps to boost economic growth in the near term, according to a communique.

The crisis remains a formidable threat to the United States’ fragile economic recovery and represents a challenge to Obama’s reelection bid, which hinges largely on voters’ assessment of his economic record.

Asked whether a deteriorating Europe could cost him the election, the president said that “it’s fair to say that all these economic issues will potentially have some impact on the election, but that’s not my biggest concern right now.”

His administration’s handling of Europe became campaign fodder recently when an economic adviser to Republican challenger Mitt Romney published an editorial in a German newspaper criticizing the administration for pushing Germany to help prop up Greece.

Obama’s campaign criticized that adviser, R. Glenn Hubbard, who was an official in the George W. Bush administration, for second-guessing the president while he was abroad. On Tuesday, Obama reiterated that rebuke.

“We have one president at a time and one administration at a time. Traditionally, the notion has been that America’s political differences end at the water’s edge,” he said. “I’d also suggest that [Hubbard] may not be familiar with what our suggestions to the Germans have been. Back home, there is a desire to superimpose whatever ideological arguments that are taking place back home onto a very complicated situation in Europe.”

A summit dinner Monday evening ran long after international leaders pressured the Europeans to move more firmly to fix their problems. A post-dinner meeting Obama had arranged with his European counterparts was canceled, purportedly because the leaders were too tired.

Obama rescheduled that discussion for Tuesday, however, and U.S. officials said the Europeans showed resolve to take firmer action.

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