Barack Obama today read the riot act to European leaders as he vetoed their bid to squeeze more money out of the International Monetary Fund - sending them begging back to China instead.
The President urged G20 leaders to swiftly sort out a eurozone rescue plan and he was forced to state he doesn't have one eye on his own prospects of staying in the White House.
President Obama's political fortunes and his economy are at risk, and at the G20 summit in Cannes, France, he pledged to be a partner in helping the Europeans cope with the economic emergency.
Soaked: President Barack Obama smiles in the rain after he read the riot act to European leaders as he vetoed their bid to squeeze more money out of the International Monetary Fund
Seeing the funny side: President Obama wipes away rain after pledging to be a partner in helping the Europeans cope with the economic emergency
Best friends? President Obama, left, and French President Nicolas Sarkozy, right, shake hands as they attend a French - United States alliance ceremony at the Cannes City Hall on Friday
But his aides insisted that Europe's problem, brought on by the threat of a Greek default, was one it had to fix. The stakes in Europe are immense as he seeks a second term in a time of economic peril.
'Events in Greece over the last 24 hours have underscored the importance of implementing the (bailout) plan,' President Obama said. 'I'm confident Europe has the ability to meet this challenge.
'There's more hard work ahead,' he added. 'All of us have an enormous interest in Europe's success. If Europe isn't growing it's harder to do what we need to do for the American people.'
Leaders of the world's major economies told Europe to sort out its own problems and deferred until next year any move to provide more crisis-fighting resources to the International Monetary Fund.
Sort it: President Barack Obama, speaking at a news conference at the G20 Summit in Cannes, France, on Friday, told G20 leaders that the impact of a Greek meltdown would reach America
Discussions: German Chancellor Angela Merkel, left, speaks with President Obama in a meeting on Friday, as he pledged to be a partner in helping the Europeans cope with the economic emergency
Potential sovereign investors such as China and Brazil want to see more detail before they firmly commit to helping out - and global stocks fell as doubts resurfaced about the rescue package.
'There's no excuse for inaction. That's true globally. It's certainly true back home. And I'm going to keep pushing it'
President Barack Obama
President Obama joked he had learned a lot in two days about the complexity of the EU's 'laborious' decision-making process but said he was confident Europe had the right plan to meet the challenge.
'The least of my concerns at the moment is the politics of a year from now,' President Obama said, in reference to the race for president in 2012. 'I'm worried about putting people back to work right now.
'There's no excuse for inaction. That's true globally. It's certainly true back home. And I'm going to keep pushing it.'
Big mission: President Barack Obama's political fortunes and his economy are at risk, and at the G20 summit in France he pledged to be a partner in helping the Europeans cope with the economic emergency
Big hitters: Britain's Prime Minister David Cameron, right, talks to President Obama, second right, Germany's Chancellor Angela Merkel, left, and France's President Nicolas Sarkozy before the start of the G20 summit
Meanwhile the situation in Greece is becoming more chaotic by the minute, as last night Germany and France effectively blackmailed Athens into dropping a referendum on a bailout deal.
'All of us have an enormous interest in Europe's success. If Europe isn't growing it's harder to do what we need to do for the American people'
President Barack Obama
Greek Prime Minister George Papandreou's threatened to bring down the single currency and the French and Germans warned Greece would be expelled from the European Union if it went ahead.
There were even claims that Europe’s big two had gone behind Mr Papandreou’s back and directly contacted the Greek opposition about how to crush the referendum and get the euro rescue agreed.
Mr Papandreou is still clinging on as prime minister and trying to create a national unity government. Constantine Michaelos of the Athens Chamber of Commerce said ‘nobody’ was running the country.
Heading out: President Obama leaves after a meeting at the G20 summit in Cannes, France, on Thursday
WHAT DID OBAMA SAY AT G20?
'The most important aspect of our task over the next two days is to resolve the financial crisis here in Europe. I agree with President Sarkozy that the EU has made some important steps toward a comprehensive solution, and that would not have happened without Nicolas's leadership.
'But here at the G20 we're going to have to flesh out more of the details about how the plan will be fully and decisively implemented.
'And we also discussed the situation in Greece and how we can work to resolve that situation as well. The United States will continue to be a partner with the Europeans to resolve these challenges.'
President Obama is in France for a summit of the Group of 20 leading industrialised and developing economies, and took his jobs-first message abroad, saying the goal was getting people back to work.
‘That means we're going to have to resolve the situation here in Europe,’ he said on Thursday, adding that resolving the financial crisis is ‘the most important aspect of our task over the next two days’.
Europe is the largest U.S. trading partner, and its intertwined financial institutions mean that a worsening crisis in Europe inevitably would spread across the Atlantic.
The timing could not be worse as the weak U.S. economy is beginning to show some signs of life even with the unemployment rate stuck at 9.1 per cent.
Helping hand: France's President Nicolas Sarkozy and U.S. President Barack Obama share a joke in Cannes
President Obama's economic options and his leverage are limited, and the European debt crisis consumed all attention at the summit meeting.
WALL STREET FALLS BACK AGAIN
U.S. stocks fell in morning trading on Friday after two days of steep gains as richer nations appeared to back away from an EU plan to broaden funding for a euro zone bailout fund.
The Dow Jones was down 179 points, or 1.5 per cent, at 11,866; the S&P dropped 21 points, or 1.7 per cent, to 1,240; and the Nasdaq fell 41 points, or 1.5 per cent, to 2,657.
The Greek government was in danger of collapsing over Prime Minister George Papandreou's call for a public vote on the rescue deal.
By mid-Thursday, the word from Athens was that the referendum had been scrapped, but the urgent need for a lasting solution dominated the meeting.
President Obama declared his solidarity with French President Nicolas Sarkozy and German Chancellor Angela Merkel, two architects of the debt bailout plan.
But he insisted: ‘We're going to have to flesh out more of the details about how the plan will be fully and decisively implemented.’
The plan would cut by half Greece's debt and create a $1.4trillion firewall to protect Europe’s other vulnerable economies. It also would impose strict and unpopular austerity measures on Greece.
Look at me: President Obama waves to the photographers while German Chancellor Angela Merkel smiles
Group photo: President Obama, front centre, poses with other leaders including (front, l-r) Chinese President Hu Jintao, French President Nicolas Sarkozy and Indonesian Prime Minister Susilo Bambang Yudhoyono
WHITE HOUSE INSISTS AMERICAN INFLUENCE STILL REMAINS AT G20
White House officials bristled at a suggestion U.S. power in the G20 had been diminished by its budget woes, as Europe looked towards an economically-confident China for help.
'Our ability to contribute, our ability to lead and our ability to influence the outcome of these sorts of issues is not tied necessarily to having the American taxpayer pay for every problem,' top White House aide Michael Froman said.
European officials hope to coax China into playing a role in a euro zone rescue fund, although Beijing has so far not publicly voiced its intentions. Domestic U.S. politics rule out any grand financial gesture for Europe by President Obama.
A Greek default alone would not necessarily send ripples to the U.S., as long as the bailout fund could contain the damage and keep countries such as Italy or Spain from going into their own crisis.
President Obama, President Sarkozy and Ms Merkel said little publically about the Greek drama.
President Obama met with President Sarkozy for about an hour and said afterward they discussed Greece and ‘how we can work to help resolve that situation as well'.
The U.S., he said, ‘will continue to be a partner with the Europeans to resolve these challenges.’
At a meeting with Ms Merkel, President Obama spoke of the need to ‘make sure that not only is the eurozone stable but the world financial system is stable as well.’
Laughter: Italy's Prime Minister Silvio Berlusconi, France's President Nicolas Sarkozy, Germany's Chancellor Angela Merkel and U.S. President Barack Obama (left-to-right) chat as they take part in the traditional photo
Chuckles: President Obama speaks with Australia's Prime Minister Julia Gillard before the start of a session
BERLUSCONI REJECTS IMF HELP
Defiant Italian prime minister Silvio Berlusconi, 75, today refused an offer of financial support from the IMF - and insisted he would not resign.
He said he did not think his coalition government would collapse as they struggle to deal with their debt crisis.
With its colossal $2.6trillion debt, Italy is now at the eye of the storm and is paying 6.43 per cent to borrow money for ten years.
That figure is perilously close to the seven per cent level where Greece, Ireland and Portugal were forced to seek a bailout.
White House aides said the upheaval in Greece showed the need to put a rescue plan in place regardless of the outcome in Athens.
‘The steps that need to be taken are clear, again, irrespective of the political personality or situation at any given moment,’ said Ben Rhodes, a deputy national security adviser.
President Obama's participation in the G20 is more limited than his role in the past four summits he has attended. His central message has been that economic growth must be balanced.
He has called on exporting economies to increase their own domestic demand and for surplus nations to use their reserves to help spur growth.
That push has been overwhelmed by the immediate crisis. President Obama is pressing for a quick resolution, but cannot offer any tools of his own to give the Europeans a boost.
Eyes right: President Obama leaves the G20 meeting at the end of the first session on the first day in Cannes
Wide shot: A general view of world leaders meeting for the G20 summit in Cannes on Thursday
Barbara Perry, a political scientist and senior fellow at the University of Virginia's Miller Center, said Obama's plight is evidence of globalism's effect on the American presidency.
‘He was getting some good economic news, things were picking up with the stock market. You would think, “Oh, finally, the president gets a break”. And then something that, let's face is, he has no control over… If he thinks Congress is beyond his control, the world stage, with this world economy - that's truly beyond his control'
Barbara Perry, University of Virginia
‘He was getting some good economic news, things were picking up with the stock market,’ she said.
‘You would think, “Oh, finally, the president gets a break”. And then something that, let's face is, he has no control over…
‘If he thinks Congress is beyond his control, the world stage, with this world economy - that's truly beyond his control.’
Among the questions facing Europeans is how they will amass a $1.4trillion bailout fund.
The Obama administration has no desire to pour money into the package few can imagine Congress ever signing off. That has left the Europeans looking to China to help build the fund.
Making their point: Protesters wearing German Chancellor Angela Merkel, French President Nicolas Sarkozy and U.S. President Barack Obama masks drink champagne as they hold a press conference in Nice, France
‘It's our belief that our ability to contribute, lead (and) influence the outcome of these sorts of issues is not tied necessarily to having the American taxpayer pay for every problem,’ said Mike Froman, another deputy national security adviser.
‘It's our belief that our ability to contribute, lead (and) influence the outcome of these sorts of issues is not tied necessarily to having the American taxpayer pay for every problem'
Mike Froman, U.S. security adviser
In their discussions, President Obama, Ms Merkel and President Sarkozy also discussed how to require financial institutions to help cover the costs of financial bailouts.
Ms Merkel and President Sarkozy prefer a tax on financial transaction, but the U.S. favours a fee on large financial institutions.
Both sides later tried to paper over differences. President Sarkozy said the two sides had reached a ‘common analysis that the world of finance must contribute to solve the problems of today’.
Mr Froman acknowledged the differences, but suggested there was ‘broad consensus’ about the U.S. and Europe pursuing things ‘in their own way, whatever way they see to be most effective.’
GREEK PM ABANDONS CALL FOR REFERENDUM ON DAY OF FARCE
In trouble: Greek Prime Minister George Papandreou speaks during a debate at the Parliament in Athens
Greek premier George Papandreou has been left fighting for his political life after his dramatic U-turn on the euro referendum he announced on Monday.
He was widely expected to resign yesterday, but instead announced he would try to form a coalition government ahead of a vote of confidence in parliament today.
However, hopes of unity soon faded when the opposition leader called on the prime minister to quit and accused him of lying.
In a speech to the cabinet, Mr Papandreou complained of the treatment he has received, saying: 'We are bearing a cross, and on top of that they are throwing stones at us.'
He hailed opposition party New Democracy's support for the bailout package as 'great', but said he will discuss the possibility of closer collaboration with the party leader Antonis Samaras.
However, Mr Samaras yesterday called on the prime minister to resign as he and other opposition MPs stormed out of a parliamentary debate about the viability of the government.
The opposition leader - a former university roommate of Mr Papapandreou - accused the prime minister of 'lying with an unbelievable ease', and said: 'If he understood that I want to co-govern with him, he’s wrong.'
This outburst makes it more likely that Greece will have to hold snap elections, as the ruling Socialists' majority in parliament is very thin.
But looking ahead to the potential fallout from the episode, Mr Papandreou remained defiant, saying Greece's membership in the eurozone is not in question.
And in an apparent justification of his refusal to step down and force an election immediately, he said such a move at this time would entail a big risk of bankruptcy.
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