Obama 'encouraged' on Europe; G-20 seeks answers

LOS CABOS, Mexico (AP) ? Needing an economic boost, President Barack Obama is trying to land assurances that Europe is closing in on a financial crisis response that will calm the markets and keep the continent's woes from undermining the world. As he presses European leaders to drum up economic demand, they want promises the United States won't plunge off a fiscal cliff by year's end.

Obama, as leader of the giant but struggling U.S. economy, remains central to the Group of 20 summit talks wrapping up Tuesday in this coastal resort region. But it is the European members gathered here, led by Germany and its chancellor, Angela Merkel, who carry both the power and responsibility to stabilize a eurozone reeling from debt, banking and political problems.

Obama was immersed in a second day of talks before meeting separately with Chinese President Hu Jintao and holding a news conference. He was to be back in Washington by the early hours of Wednesday, where a fierce re-election campaign and a slumping U.S. jobs market await him.

The leaders gathered on the Mexican coast seemed intent on sending the right signals to jittery markets and unhappy electorates. Merkel told reporters Tuesday that the European leaders present made a unified statement that they were willing to tackle their problems.

"From the side of the European Union we argued unanimously and collectively that we are determined to solve the crisis, and to do it in a mix of fiscal consolidation, growth initiatives, and deepening of European cooperation," she said. "That reached very attentive ears here."

A senior Obama administration official said Tuesday that European are pursuing "more forceful response" than they have contemplated to date. The Obama official said the European strategy will be based around building more viable financial institutions over time but also economic growth measures in the short term, a step Obama has been urging for some time.

Still, European leaders were showing flashes that they have heard enough about their troubles, particularly from Americans.

"The eurozone has a serious problem, but it is certainly not the only imbalance in the world economy," Italian Prime Minster Mario Monti said Tuesday. He said the United States' own problems were mentioned in G-20 talks "by almost everybody, including President Obama."

European Commission President Jose Manuel Barroso took an aggressive tone with reporters on Monday, also pointing some blame at North America and saying "Frankly we are not coming here to receive lessons in terms of democracy."

Obama sent some upbeat signals Monday amid a sense of global relief that Greece, based on new elections, would not renege on its bailout terms and ditch the euro currency. Obama left a meeting with Merkel feeling "encouraged" about Europe's direction, a spokesman said, as an even more consequential European summit on the crisis approaches in Brussels.

Europe's ability to turn around its fortunes fast will have direct bearing on whether Obama wins a second term. The bigger the drag from abroad, the harder the job growth in the United States.

Obama said all countries must "make sure that we're contributing so that the economy grows, the situation stabilizes, confidence returns to the markets."

Obama was spending much of Tuesday on the economic crisis after taking care of some unrelated diplomatic business ? his first meeting with Vladimir Putin since the former Russian president returned to the job this year. The leaders met for two hours Monday, in talks dominated by a bloody Syrian conflict that has deeply divided Russia and the U.S.

Although the foreign gatherings allow Obama to show off statesmanship, every day spent away from the United States and a direct focus on jobs in America quietly gives headaches to his campaign aides. While Obama was in Mexico, his Republican competitor, Mitt Romney, was campaigning in the American heartland, trying to pull Wisconsin from Obama's column.

Central to the G-20 debate is how nations can boost jobs and consumer demand without sinking deeper into debt. Obama has implored governments to spend and grow, not just cut.

A draft of the leaders' final statement shows they want assurances that the United States won't take a deep plunge and drag them down as well.

The statement says the U.S. will "calibrate" its attempt to rein in debt and spending "by avoiding a sharp fiscal contraction in 2013."

That's a reference to a big threat to economic growth in the United States after the November election: the expiration of George W. Bush-era tax cuts and a scheduled round of automatic spending cuts that could send the nation back into a recession.

While the White House and lawmakers agree that they must act late this year or early next year to avoid such a "fiscal cliff," there is no path yet on how to avoid it.

Wall Street showed no giddiness after pro-Europe parties prevailed in Sunday's Greek election. U.S. stocks were little changed and investors seemed fed up with Europe's crisis.

Obama's political move has been to constantly show confidence in Europe's ability to solve its problems, but prod its leaders to move and chide them for not doing more sooner. Now, White House aides talk more positively about the direction of the debate, as they see it, toward the role of government in spurring economic growth.

"I think if you look at the shift in the focus, you'll see a very strong focus on supporting demand ... recognizing that economic conditions have deteriorated," said Lael Brainard, the Treasury Department's undersecretary for international affairs.

"This is very important to the Europeans in particular," she said. "And yes, we have heard it from German colleagues."

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Associated Press writers Anne Gearan and Michael Weissenstein contributed to this report.

senior Obama administration official says the plans European leaders are pursuing to stabilize their finances now and in the long run will be a "more forceful response" than they have contemplated to date. The Obama official said the European strategy will be based around building more viable financial institutions over time but also time-buying measures in the short term.

The official spoke on condition of anonymity at the Group of 20 summit in Mexico to characterize private talks without trumping the formal comments of leaders.

European leaders will unveil the more detailed response to the continent's financial crisis in Brussels during at summit at the end of June.

The official said Europeans made clear they know they have to do more.

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