Obama Urges Europe to Address Its Debt Crisis

Leaders should favor growth over austerity in response to rising populism, president says

The Washington Post

By CAROL E. LEE and  NEKTARIA STAMOULI
Updated Nov. 15, 2016 12:14 p.m. ET
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ATHENS—President Barack Obama urged Europe to resolve lingering issues from its debt crisis, saying on Tuesday that leaders should favor growth over austerity, as part of their response to the rising populism in Western countries exemplified by the election of Donald Trump.
Mr. Obama made the appeal after meeting with Greek Prime Minister Alexis Tsipras, who said it is time for Greece to receive significant debt relief from Europe.



Mr. Obama said European leaders should follow economic policies that ease some of the voter backlash against globalization, as they grapple with political trends similar to those behind Mr. Trump’s victory in the U.S. presidential election.

The departing president told a news conference in Athens with the Greek premier that Mr. Trump’s triumph and this summer’s U.K. referendum vote to leave the European Union derived from the same strain of populism. “Time will tell whether the prescriptions being offered…end up satisfying the people who were angry or concerned,” Mr. Obama said.

Mr. Obama backed his Greek host’s call for German-led creditors to ease Greece’s debt burden. “It is incredibly important that the Greek people feel an improvement in their daily lives,” Mr. Obama said. “And now that the economy is growing again, the time is right” for debt relief, he said.

Mr. Tsipras had hoped for such support from Mr. Obama, who is visiting Greece for the first time as president, to put pressure on Berlin and other lenders to reward Greece’s strenuous efforts at fiscal retrenchment.

Greece is entering the eighth year of its agonizing debt crisis, during which it has lost about a quarter of its economic output and jobs, and required three international bailouts to keep it from crashing out of the euro.

Mr. Tsipras argues the country is beginning the turn the corner. But the economy still faces big challenges including stricken banks, depressed business sentiment, and a bailout plan that implies further painful austerity.

Mr. Tsipras is hoping for at least limited restructuring of Europe’s loans to Greece in coming months, and for the European Central Bank to include Greece in its bond-buying program early next year. Those steps, the Greek leader hopes, would add momentum to a so-far patchy economic recovery, and revive his government’s sinking popularity.

The Obama administration has taken a close interest in the eurozone’s travails, lobbying for decisive measures to repair struggling countries’ solvency and growth.

Mr. Obama’s choice of Athens and Berlin as the venues for his final European trip as president has been interpreted in Europe as a message that he views the Greek debt crisis as important unfinished business. His comments on Tuesday put the ball in Germany’s court.

However, German leaders are reluctant to give Greece major concessions as they head toward their own national elections in fall 2017. And the end of Mr. Obama’s term means Greece is losing an ally. President-elect Trump has said the eurozone’s troubles aren’t the U.S.’s problem.

Mr. Obama is due to meet German Chancellor Angela Merkel and other major European leaders in Berlin this week, for discussions expected to focus on economics, security, and rising populism.

Ms. Merkel and her European peers are expected to seek assurance from Mr. Obama that the upset victory of Mr. Trump won’t imperil the U.S.’s alliances and other key policies.

Although Mr. Obama and Ms. Merkel have become close allies over recent years, the topics of austerity and eurozone economics have led to strong disagreements between them, say officials familiar with their relationship.

After a state dinner with Greek leaders late on Tuesday, Mr. Obama will tour the Acropolis on Wednesday before delivering a speech that will “focus on the important work that’s been done to try to address the economic challenges in Greece and Europe and around the world,” said Ben Rhodes, one of the president’s deputy national security advisers.

As is usual in Athens, Greek anarchists, far-left groups and trade unions have called for protests against the visiting U.S. leader, despite a two-day ban on public gatherings in central Athens.

The Greek Communist Party called for mass participation in march on Tuesday evening against the “representative of the imperialist powers.”

—Marcus Walker contributed to this article

Write to Carol E. Lee at carol.lee@wsj.com and Nektaria Stamouli at nektaria.stamouli@wsj.com