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Less urgency at this year’s G-8 meeting

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press
Monday, June 17, 2013 - 12:01 am

WASHINGTON — When leaders of the nation’s biggest economies gathered at the presidential retreat of Camp David last year, European elections had rattled the continent with a rejection of austerity measures. President Obama was himself seeking re-election. The sense of urgency was palpable as Obama made an emphatic pitch for Europe’s powers to focus more on economic growth.

These days, as Obama prepares for another summit of the Group of Eight industrial nations next week, the furor has died down. Financial tensions in Europe have eased, high-debt nations have been given more time to work on their fiscal cuts, and even the language has changed from “austerity” to “growth-oriented structural reforms.”

“The context of that discussion has changed a lot over the past year,” said Caroline Atkinson, a senior White House international economics adviser.

Still, much of the eurozone remains mired in or near recession. Obama’s appeals have had mixed results in softening the demands on some of the most debt-ridden European nations to cut their spending. While the U.S. still wants Europe to temper the debt trimming and increase global demand, Obama is not expected to be as insistent with other G-8 leaders this time as they meet at a luxury hotel and golf resort beside Lough Erne in Northern Ireland’s County Fermanagh lakeland.

Obama is scheduled to arrive in Northern Ireland today and immediately deliver a speech in Belfast largely focused on U.S. support for the peace process there. The global economy will be the topic of the first meeting with G-8 leaders at the summit site, followed by a one-on-one meeting with Putin.

After the summit ends, Obama will head to Berlin for meetings with German officials, including Chancellor Angela Merkel. The two will address reporters at a news conference afterward before Obama delivers a speech on the eastern side of the historic Brandenburg Gate. Obama also will be the guest of honor at a reception and dinner hosted by Merkel.

On the economic front, the G-8 leaders were also to discuss trade and corporate tax avoidance, two topics that, while prominent, were not expected to result in major announcements.

The European economic picture remains bleak. The eurozone economy contracted about 0.8 percent in the first quarter, compared with the same period in 2012. Among G-8 members, Italy and France saw their gross domestic product shrink 2.4 percent and 0.4 percent respectively over the first quarter of 2012. Germany, the region’s largest economy, and Britain saw modest growth in the first quarter, but still sharply lower than other G-8 members.

Russia saw annual growth of 1.6 percent in the first quarter, the U.S. grew at 2.4 percent, Canada at 2.5 percent and Japan at 4.1 percent.

Administration officials and former government economic advisers say Obama and his aides will still push European nations to moderate their austerity programs of spending cuts and tax increases in favor of more stimulus to boost growth and counter the high unemployment that still afflicts many countries in Europe, particularly Spain and Greece.

Germany and Britain have resisted some of the U.S. entreaties, arguing that heavily indebted European nations must trim deficits to restore market confidence and lower government borrowing costs.

Administration officials say they believe that they can make a compelling case by using the U.S. as an example of how to help the economic recovery without deep budget cuts. The Obama administration responded to the recession with a stimulus package in 2009. Officials argue that increased economic activity and a turnaround in the housing industry have helped increase revenues and lower the deficits.

But U.S. deficits have also been lowered through steps that could be deemed austerity measures, including a tax increase on the wealthy, restoration of a payroll tax on workers and automatic budget cuts that began in March. By many economists’ assessments, those steps have cost the U.S. economy 1 percentage point in potential growth.