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Context of 'July 9, 2009: G-8 Says Global Economic Recovery Too Weak to Withdraw Stimulus Efforts'

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European Union Leaders hold an emergency summit in Brussels, saying they are determined to avoid protectionist moves in response to the economic crisis that might cause a rift between nations in the East and West. The summit comes on the heels of French President Nicolas Sarkozy’s pledge to help his nation’s car industry, if jobs were safeguarded in France. Sarkozy’s pledge raised fears that national protectionism could scuttle hopes of a Eurozone recovery. Speaking after their meeting, European Commission President Jose Manuel Barroso says, “There was consensus on the need to avoid any unilateral protectionist measures.” German Chancellor Angela Merkel says that the newest EU member states that are former communist countries were not all in the same situation. Czech Republic Prime Minister Mirek Topolanek, the current EU president who also chairs the talks, condemns Sarkozy’s comments, saying: “We need a Europe without barriers but also a just and fair Europe. I think that it was perfectly clear that the European Union isn’t going to leave anybody in the lurch.” British Prime Minister Gordon Brown adds: “Today was the start of a European consensus on all these major issues that are facing the world community, including ‘no’ to protectionism. Bold global action, a global grand bargain, is not now just necessary, but it is vitally urgent.” President Sarkozy denies accusations of protectionism levied at his €6 billion (approximately $8 billion) bail-out plan to keep French carmakers manufacturing in France, but says that if the US defended its own industries, perhaps Europe should do the same. There is no announcement of a new EU aid package for the badly-hit economies of Central and Eastern Europe. The summit comes a week after the same EU leaders met to discuss reforming the EU’s financial system. Brown says the G20 talks next month represent an opportunity to agree on a new deal. “Only by working together will we deliver the EU and international recovery we need,” he says. This week, Brown will become the first European leader to hold talks with President Obama, who is also expected to visit Prague in April. [BBC, 3/1/2009]

Entity Tags: Nicolas Sarkozy, Angela Merkel, Barack Obama, European Parliament, Gordon Brown, Mirek Topolanek, Jose Manuel Barroso

Timeline Tags: Global Economic Crises

Group of 8 (G-8) leaders from across the globe release a statement from their meeting in L’Aquila, Italy, saying that economic recovery from the worst recession since World War II is too frail for them to consider repealing efforts to infuse money into the economy. US President Barack Obama, British Prime Minister Gordon Brown, European Commission President Jose Barroso, German Chancellor Angela Merkel, Canadian Prime Minister Stephen Harper, French President Nicolas Sarkozy, Japanese Prime Minister Taro Aso, Italian Prime Minister Silvio Berlusconi, and Russian President Dmitriy Medvedev assembled for the annual gathering where Obama pressed to maintain an open door for additional stimulus actions. A new drop in stocks generated global concern that, to date, the $2 trillion already sunk into economies had not provided the economic bump that would bring consumers and businesses back to life. “The G-8 needed to sound a second wakeup call for the world economy,” Brown told reporters after the gathering’s opening sessions. “There are warning signals about the world economy that we cannot ignore.” A G-8 statement embraces options ranging from a second US stimulus package—advocated by some lawmakers and economists—to an emphasis by Germany on shifting the focus to deficit reduction.
What Next? - Disagreements over what to do next, as well as calls from developing nations to do more to counteract the slump, emphasize that the Group of 8 has little if any room to maneuver, since the largest borrowing binge in 60 years has, so far, failed to stop rising unemployment and has left investors doubting the potency of the recovery. Even as G-8 leaders held their first meeting, the Morgan Stanley Capital International (MSCI) World Index of stocks continued a five-day slide, and the 23-nation index had dropped 8 percent since its three-month rally that ended on June 2. The International Monetary Fund (IMF) upgraded its 2010 growth forecast, saying the rebound would be “sluggish,” and urged governments to stay the course with economic stimuli. The IMF also said that emerging countries such as China would lead the way, with an expansion of 4.7 percent in 2010, up from their April prediction of 4 percent. “It’s a very volatile situation,” said European Commission President Barroso in a Bloomberg Television interview from L’Aquila. “We are not yet out of the crisis, but it seems now that the free fall is over.”
Exit Strategems Discussion - “Exit strategies will vary from country to country depending on domestic economic conditions and public finances,” the leaders conclude, but deputy US National Security Adviser Mike Froman tells reporters, “There is still uncertainty and risk in the system.” Froman says that although exit strategies should be drawn up, it’s not “time to put them into place.” The IMF forecasts that, in 2014, the debt of advanced economies will explode to at least 114 percent of US gross domestic product because of bank bailouts and recession-battling measures. German Chancellor Merkel, campaigning for re-election in September and the leading opponent of additional stimulus, warned against burgeoning budget deficits, which the IMF has predicted will rise to an average of 6 percent of the EU’s 2009 gross domestic product, from 2.3 percent in 2008. At last month’s European Union summit, Merkel pushed through a statement that called for “a reliable and credible exit strategy,” and insisted, “We have to get back on course with a sustainable budget, but with the emphasis on when the crisis is over.” [G8 Summit 2009, 7/2/2009; Bloomberg, 7/9/2009]

Entity Tags: Morgan Stanley Capital International (MSCI) World Index, Mike Froman, Jose Manuel Barroso, International Monetary Fund, Taro Aso, National Security Council, Nicolas Sarkozy, Silvio Berlusconi, Angela Merkel, Gordon Brown, Barack Obama, Standard & Poor’s, Stephen Harper, Dmitriy Medvedev

Timeline Tags: Global Economic Crises

With President Obama serving as chairman, the United Nations Security Council collectively approves Resolution 1887 to decrease withdrawals from the Nuclear Nonproliferation Treaty. The measure also decreases the opportunity for civilians to divert nuclear resources for the development of sophisticated weaponry. Although they are not specifically mentioned, it is believed that the resolution is to ensure compliance by countries such as North Korea and Iran, each of which has either banned inspectors or rigorously restricted their access. “The resolution is not about singling out nations,” Obama says. “We must demonstrate that international law is not an empty promise, and that treaties will be enforced.” Officials of the Obama administration say that the resolution will not become binding unless and until the Security Council takes steps to subject nuclear exports to supplementary restrictions. Britain’s Prime Minister Gordon Brown, as well as France’s President Nicolas Sarkozy, say that current sanctions against Iran and North Korea are inadequate, and ask the council for “far tougher sanctions” against Iran. Sarkozy says, “What I believe is that if we have the courage to affirm and impose sanctions on those who violate resolutions of the Security Council, we will be lending credibility to our commitment to a world with fewer nuclear weapons and ultimately with no nuclear weapons.”
"A World without Nuclear Weapons" - During his opening speech, Obama describes his vision of “a world without nuclear weapons,” as reflected in the text of Resolution 1887. He says the resolution “revitalized” the Security Council’s commitment to a world without nuclear weapons, while reaffirming nuclear proliferation as a threat to global peace and security. “We harbor no illusions about the difficulty of attaining such a world,” Obama notes, “but there will also be days like today that push us forward—days that tell a different story.”
Rare Security Council Session - Today’s session is unusual in that it is only the fifth time the Security Council has held a summit-level meeting since the founding of the United Nations in 1945. Obama, as chairman, makes history as the first US president to head a UN Security Council session.
US and Russia Meet - The day before, Obama met with Russia’s President Dmitri Medvedev for the first time since he announced that former President George W. Bush’s Eastern Europe missile defense program would be replaced by a system that Moscow sees as less menacing. Although Obama administration officials publicly deny that the missile defense replacement decision was a result of quid pro quo, for the first time, Medvedev indicates that his country would be agreeable to repeated American requests for drastically tougher Iran sanctions, should the October nuclear talks scheduled with Iran fail. “I told His Excellency Mr. President that we believe we need to help Iran to take a right decision,” Medvedev says. “Sanctions rarely lead to productive results, but in some cases, sanctions are inevitable.”
Dignitaries in Attendance - Among the dignitaries attending the session are former Secretary of State Henry Kissinger, media mogul Ted Turner, and Queen Noor of Jordan; all three are active in efforts toward nuclear disarmament. [New York Times, 9/24/2009]

Entity Tags: Dmitriy Medvedev, Gordon Brown, Ted Turner, United Nations, Barack Obama, Noor al-Hussein, Nicolas Sarkozy, United Nations Security Council, United States, Henry A. Kissinger

Timeline Tags: US International Relations

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