Obama, Merkel warn on Greek default

WASHINGTON — President Barack Obama said Tuesday he worries that a Greek default on its debt could have disastrous implications for the U.S. economy.

WASHINGTON — President Barack Obama said Tuesday he worries that a Greek default on its debt could have disastrous implications for the U.S. economy.

Speaking in a news conference with German Chancellor Angela Merkel, Obama said that Germany and other European countries needed to act together to help Greece stabilize its economy.

He said that America’s economic growth depended on a sensible resolution to Greece’s problems.

“We think it would be disastrous for us to see an uncontrolled spiral and default in Europe because that could trigger a whole range of other events,” he said.

The news conference came on a day of high pomp at the White House beginning with a 19 gun salute to welcome the German leader. Later, Obama was to present Merkel the Presidential Medal of Freedom during a formal dinner. The gestures appear aimed at boosting a relationship that has seemed more cordial than close.

In their joint appearance, the interaction indeed seemed relaxed and friendly. At the end of the event, Merkel defended Obama against talk in Germany that he had skipped Berlin in his visits to Europe as president.

“Berlin opens its arms to him every day, but the Berliners can also wait,” she said. “They have proved this throughout their history.”

Merkel also noted the link between the U.S. and European economies.

“Through the global financial and economic crisis, we’ve seen how interdependent we are,” she said. “So we do see clearly our European responsibility. And we’re shouldering that responsibility together with the IMF.”

European Union countries and the International Monetary Fund have been discussing with Greece whether it needs further loans to keep it from defaulting on its existing debt.

Obama says the U.S. and Germany will continue to consult on the debt crises that have struck countries in Europe, including Greece.

The two leaders also touched on NATO-led military campaigns in Afghanistan and Libya, as well as Iran, during their meeting at the White House Tuesday.

Obama sought to put to rest any suggestion his relationship with Merkel was in any way strained, praising Merkel’s “pragmatic approach to complex issues” and saying that “it’s just fun to work together.”

Merkel, likewise, depicted a close relationship, although she acknowledged that “sometimes there may be differences of opinion.”

Obama and Merkel, for example, have had differences on Libya, after Germany abstained in the U.N. vote that authorized a no-fly zone over Libya and kept its troops out of the NATO-led operation to enforce it.

Obama, without mentioning that, said Germany’s deployment of resources in Afghanistan had allowed other NATO allies to increase support for the Libyans, and he stressed that both he and Merkel believe Libyan Leader Moammar Gadhafi has to step down.

When that happens, Obama said says he expects Germany to play a major role in Libya.

He said there will be much work to do in helping the Libyan people and the country’s economy. He says he and Merkel discussed how Germany could contribute to those efforts during their meetings

Germany has thus far stayed out of the NATO-led bombing campaign in Libya. The U.S. first took the lead when operations began in March, but have since handed over control to NATO allies, including France and Britain.

Obama says he and Merkel both believe Gadhafi must step down and that his removal from power is inevitable.

On Afghanistan, where Germany has 5,000 troops stationed mostly in the increasingly volatile north, Merkel said the two leaders were committed to stabilizing the country not just militarily, but also in terms of bolstering its civil society, adding that “We will not abandon them.”

“We wish to go in together, out together,” she said of U.S. and German troops. Both leaders face significant opposition to the war from their people at home.

The U.S. has roughly 100,000 troops in Afghanistan, and Obama renewed his pledge to begin a significant drawdown of U.S. troops this summer. Germany hopes to start a gradual troop withdrawal at the end of the year.

On another world trouble spot, Obama said that Iran’s nuclear program remains a “very serious concern” for the U.S. and Germany. He threatened greater sanctions against Tehran pending the outcome of a meeting of the International Atomic Energy Agency this week.

Obama said that if the agency determines again that Iran is continuing to ignore its international obligations, “then we will have no choice but to consider additional steps, including potentially additional sanctions, to intensify the pressure on the Iranian regime.”

Obama didn’t commit to making a presidential visit to Berlin anytime soon, but recalled having had “fun” giving a speech there when he ran for president in 2008, and drew adoring throngs. Merkel had refused his request to speak in front of the Brandenburg Gate, a Cold War symbol that previous American presidents have used as a backdrop. He spoke at a nearby monument instead.

Merkel hinted it might be different next time, quipping, “I can promise that the Brandenburg Gate will be standing for some more time.”

Obama is using both pomp and quiet moments to strengthen his relationship with Merkel. The two leaders met for a quiet dinner in the city’s historic Georgetown neighbourhood at an elegant restaurant modeled on a country inn.

Merkel comes at a time when she is suffering a loss of popularity amid problems with her coalition partner and a backlash from Germans upset about their country’s large contribution to the European financial bailout of Greece. Her decision this month to halt Germany’s nuclear energy production by 2022, however, has given her a small boost in a country that long has had a strong anti-nuclear movement.

Merkel also is in the midst of managing the response to an E. coli outbreak linked to raw vegetables that has killed at least 24 people and sickened more than 2,300, most in Germany.

Though Merkel’s trip is not a “state visit,” because she is the head of Germany’s government, not its head of state, it has almost all the trappings. The only difference was that Merkel received a 19-gun salute during the White House arrival ceremony, while a head of state gets 21.

Obama awarded Merkel the Medal of Freedom last year but did not have an opportunity to present it to her. At the time, Obama spoke about her youth in communist East Germany and her dreams of freedom that were not realized until the Berlin Wall came down in 1989. Obama said her story was an inspiration to people around the world.

While the black-tie dinner has been in the works for months, the White House was keeping a tight lid on all aspects of the evening.

Among the few known details: Both the dinner and reception and entertainment will be held in the Rose Garden, a first for the Obamas. Workers were laying down carpet on the lawn Monday evening in preparation. Guests also are likely to dine on fresh lettuce and other produce from Mrs. Obama’s garden.


Associated Press writers Melissa Eddy and David Rising in Berlin and Darlene Superville, Julie Pace and Jennifer Kerr in Washington contributed to this report.

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