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Obama Presses EU Leaders for Debt Resolution

November 28, 2011 at 12:00 AM EDT
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GWEN IFILL: Next, a debt crisis in Europe that, until now, has jolted individual countries, now threatens their common currency.

Jeffrey Brown has our story.

JEFFREY BROWN: Mounting fears for the fate of the eurozone dominated an annual summit held today, as President Obama hosted leaders of the European Union.

The president again pressed for a resolution to Europe’s banking and debt crisis, one that would prevent its further spread worldwide and here in the U.S.

PRESIDENT BARACK OBAMA: If Europe is contracting or if Europe is having difficulties, then it’s much more difficult for us to create good jobs here at home, because we send so many of our products and services to Europe. It is such an important trading partner for us.

JEFFREY BROWN: Just a few weeks ago, at the G-20 summit in France, a deal seemed to be in hand. But the situation has deteriorated since then. Skeptical markets have been bidding up interest rates and borrowing costs for Italy and other troubled states.

And even Germany, with one of the strongest European economies, had trouble raising funds in a government bond auction last week. Moreover, the crisis has claimed new political casualties. On Nov. 9, Greek Prime Minister George Papandreou resigned in the face of new European bailout plan that demands deep spending cuts. Two days later, Italian Prime Minister Silvio Berlusconi was forced out as well.

And, last week, Spain’s conservative Popular Party swept the ruling Socialists out of power. In all, at least eight governments in the eurozone have fallen since February. In addition to Spain, Italy and Greece, new leaders have taken power in Slovakia, Denmark, Portugal, Finland and Ireland, either through elections or parliamentary actions.

And in recent days, the problem has become systemic, raising questions as to whether the euro system itself can survive. Today, the Organization for Economic Cooperation and Development warned that the euro crisis remained — quote — “a key risk to the world economy.” And the credit rating agency Moody’s said the crisis may lead multiple countries to default or leave the euro.