G8 leaders urge Europe to focus on growth rather than austerity at G8 summit

CAMP DAVID, Md. – The Group of Eight nations are advocating growth rather than austerity in Europe after spending two days of meetings at storied Camp David aimed at containing an escalating fiscal crisis overseas.

U.S. President Barack Obama, Prime Minister Stephen Harper and leaders of the world’s other top economies agreed that while Europe should still toil to reduce deficits, it must above all else promote widespread growth and job creation.

“All of us are absolutely committed to making sure that both growth and stability and fiscal consolidation are part of a overall package that all of us have to pursue in order to achieve the kind of prosperity for our citizens that we’re looking for,” Obama said at a news conference at the end of the summit.

In a group statement, the G8 leaders added they hoped Greece would remain part of the eurozone as it struggles to deal with a devastating sovereign debt crisis.

But the communique didn’t offer any specific solutions to a crisis that could pose grave political dangers to all of the G8 leaders should it deepen. European countries must each decide for themselves how best to foster economic recovery, the leaders said.

German Chancellor Angela Merkel has pushed for increased austerity in the European Union. But Obama, meantime, has argued forcefully — and apparently persuasively — that a one-size-fits-all austerity approach is too risky and that a pro-growth policy was the route to take.

On a separate issue, the G8 leaders also said it might also become necessary to tap the world’s strategic oil reserves to keep oil flowing during an embargo of Iran. Obama said progress was also made on Syria and North Korea.

Nonetheless the European situation, and the need to spur growth, was the dominant topic of discussion at the summit held in this lush, leafy presidential retreat far from the reach of the protesters who have so famously disrupted past meetings.

At his own news conference at day’s end, Harper denied that a previous emphasis on austerity measures at Toronto’s G20 was misplaced. At that summit, countries agreed to halve their deficits by 2013.

“Fiscal discipline and economic growth go hand and hand,” he said. “All of our discussions recognize that. Fiscal discipline is not sufficient for economic growth, but it is absolutely necessary.”

Earlier Saturday, the Canadian delegation pushed for a solution to resurrect teetering European economies that involved neither devastating austerity measures nor massive stimulus spending.

“It doesn’t have to be an either/or situation; trade, for example, is a way to cultivate growth,” said a senior Canadian government official. “Free trade deals create jobs and stimulate growth and don’t involve government spending a lot of money.”

Canada, in fact, is working toward a free-trade agreement with the European Union. Those efforts were among the topics of discussion Saturday between Harper and Francois Hollande, the newly elected French prime minister.

He had another bilateral meeting with British Prime Minister David Cameron, this one on the flight from the D.C. region to Chicago for meetings of the North Atlantic Treaty Organization. Obama said the leaders hoped to build on the progress made at the G8 at both the NATO meeting and the upcoming G20 summit.

At the NATO summit, Afghanistan’s economic future and security was slated to be the top item on the agenda.

The U.S. doesn’t want to be solely on the hook for the estimated $4.1 billion price tag to sustain Afghan security forces when international troops withdraw at the end of 2014.

Australia, Britain and Germany have already contributed funds but Canadian officials wouldn’t say whether Ottawa plans to pony up too.

In contrast to the peace and serenity of isolated Camp David, where warbling birds and gentle breezes provided the soundscape, police sirens and shouting protesters were to greet the leaders in Obama’s hometown. Police had already arrested three people on suspicion of terrorism ahead of the NATO meetings.

The Camp David meetings kicked off with a dinner on Friday before leaders retired to private cabins on the pristine, heavily wooded grounds of the compound. Harper’s cottage was called Rosebud.

It was the first time so many heads of state had gathered at the retreat, Obama said.

A morning discussion on the European crisis, especially the prospect of Greece’s exit from the European Union, continued for so long on Saturday morning that it delayed the traditional “family photo” for more than an hour.

The leaders, dressed casually and in close physical proximity, had spent the morning at a circular table not much larger than a poker table in order to encourage full and frank discussions on the crisis.

“We do get into actual, substantive discussions at the G8, far more so than at the G20,” the Canadian official said.

At a working lunch at Camp David’s Laurel Lodge, African leaders and business representatives were also in attendance. The continent’s food security and agricultural productivity were the subject of discussion.

“My goal today is to go beyond agreeing on the importance of the issue and the enormity of the challenge,” Obama said.

The president welcomed three fresh faces to the G8. France, Italy and Japan all have new leaders.

Harper, one of the longest-serving leaders at the summit, arrived at Camp David on a wave of good news. A new report ranks Canada first when it comes to G8 countries fulfilling pledges made at international summits.

In what has been widely viewed as a snub, Russian President Vladimir Putin skipped the summit, sending Prime Minister Dmitry Medvedev in his place.

Note to readers: This is a corrected story, a previous version wrongly suggested Italy and Japan have new heads of state