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Transition 2012

A guide to foreign policy and the 2012 U.S. presidential transition.

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Economy Update: Obama Hosts Summits Amid Euro Tremors

by Newsteam Staff
May 18, 2012

Ssecurity fence set up around the perimeter of McCormick Place, which will host the NATO meeting, in Chicago May 17, 2012. (Jim Young/Courtesy Reuters) Ssecurity fence set up around the perimeter of McCormick Place, which will host the NATO meeting, in Chicago May 17, 2012. (Jim Young/Courtesy Reuters)

As President Barack Obama takes a campaign pause to play host at back-to-back high-level international summits with leaders of NATO and the G8, analysts say the eurozone crisis is becoming a factor in the U.S. election already heavily focused on economic issues.

While Camp David and his hometown of Chicago are good venues for Obama to show U.S. voters he is playing a leadership role on foreign policy, the president may have little control over dialogue at the G8, which is expected to be dominated by Europe’s economic problems (Bloomberg). The deepening crisis in the eurozone could cause problems for the slowly growing U.S. manufacturing sector, which partially relies on exports to Europe to stay afloat, and a European financial collapse on the order of the U.S. financial crisis in 2008 could also reverberate into the fragile U.S. economy (Reuters).

“[Obama's] instant invitation to France’s newly elected president, Francois Hollande, to White House talks on the eve of this weekend’s Group of Eight summit is evidence of a central fact in the United States: The states that will do most to determine the outcome of November’s presidential and congressional elections may not be swing states like Ohio but member states of the European Union,” writes Reuter’s Andy Sullivan and Peter Apps.

Missing from the gatherings of world leaders will be recently reelected Russian President Vladimir Putin, which Jonathan Horn, a former speechwriter for Goerge W. Bush, (Forbes) counts as problematic for the Obama election effort. “While the White House continues to tout improving relations with Russia as a foreign policy accomplishment, the country increasingly appears more as presumptive Republican nominee Mitt Romney described it – a ‘geopolitical foe’,” Horn says.”The timing could not be worse for Obama, who wants to cast himself as a foreign policy realist running for reelection against a foreign policy novice.”

For more on the candidates’ stances, check out CFR’s Issue Tracker on The Candidates and the Economy.

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Peterson Institute for International Economics fellow C. Randall Henning tells CFR the non-European members of the G8 will have a moment of vindication this weekend. “The non-Europeans at the G8 should say, ‘We told you so. We said a long time ago that an incremental approach to the crisis was dangerously behind the curve’,” he says. “The non-Europeans at the G8 should impress upon them the necessity of developing a growth agenda and moving toward a European-wide solution to the banking problems in a preemptive way, so when they have a confrontation with Greece they can do so without contagion in the rest of Europe–and, indeed, the rest of the world.”

Next week’s NATO summit will differ greatly from the G8 meetings, says CFR’s Stewart Patrick, with focus on the endgame in Afghanistan, implementing NATO’s new “smart defense” doctrine, and bolstering partnerships within the alliance.

–Contributing Editor Gayle S. Putrich

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