Obama: US stronger on world stage despite setbacks

President Barack Obama claimed today he had a stronger hand on the world stage despite electoral defeats at home, failure to get a free-trade agreement with South Korea and lacklustre international support for his policy with China on trade and currency disputes.

“It wasn’t any easier to talk about currency when I was first elected and my poll numbers were at 65%,” Obama said at the close of the G20 summit in South Korea, after bluntly accusing Beijing of undervaluing its currency.

The president flew to Japan for an Asia-Pacific Economic Cooperation summit without the coveted trade pact with South Korea or a united front with other countries against China’s currency policy.

He also endured criticism from other countries about a decision by the central bank to pump $600bn into the economy, something China, Germany and others believe could weaken the dollar and lead to inflation.

After the APEC talks, which begin on Saturday, Obama will return to the US to confront Republicans empowered by their gains in this month’s midterm elections.

Even so, the president contended that his standing with world leaders is not diminished.

“When I came into office people might have been interested in more photo-ops,” the president said, because of the “hoopla surrounding my election”.

But he said he has developed friendships with leaders including Indian Prime Minister Manmohan Singh, German Chancellor Angela Merkel, South Korean President Lee Myung-bak and even Chinese President Hu Jintao.

“That doesn’t mean there aren’t going to be differences,” the president added.

Those were on stark display throughout the G20 summit, which resulted in a final document in which leaders agreed on various measures to achieve economic stability, none of them enforceable or specific.

Obama contended this still constituted victory, even as he acknowledged that America’s place in the world has changed and is no longer the dominant superpower.

“We are now seeing a situation where a whole host of other countries are doing well and coming into their own and naturally they’re going to be more assertive ... and that’s a healthy thing,” the president said.

Obama told a news conference that progress was made in stabilising and strengthening the global economy, saying it is now back on “the path to recovery.”

But he also said that nations “risk slipping back” into peril if they do not work harder to foster sustained growth, end unfair trade practices and currency manipulation, and argued that “countries with large surpluses must shift away from unhealthy dependency on exports” and that exchange rates “must reflect economic realities”.

Obama said China’s currency “is undervalued”. He added that Beijing “spends enormous amounts of money” to keep the yuan in that condition and said it’s critical for China, “in a gradual fashion” to let markets set the currency’s value.

But Obama’s summit partners declined to endorse his position, issuing a watered-down statement saying only that they agreed to refrain from “competitive devaluation” of currencies.

Of criticism from Germany and other quarters that the Federal Reserve Board engaged in what amounts to currency manipulation by purchasing US Treasury bonds, the president said the move “was not designed to have an impact on the currency, the dollar. It was designed to grow the economy”.

Obama said that while improvements in the global economy have been made in a number of areas, he and other leaders recognise “progress hasn’t come quickly enough” particularly in the area of job creation.

“We have a recovery. It needs to be speeded up. Government cannot hire back the eight million people that lost jobs,” he said. “That needs to be done by the private sector.”

The failure over a free-trade pact with South Korea was an setback for a president who stressed that the top objective of this trip was to cement agreements that would help create jobs at home, particularly through new trade opportunities with fast-growing economies like China, India and Indonesia.

Obama reiterated his intent to finalise the trade agreement with South Korea. A major sticking point remains access to the South Korean market for US cars.

“I think that we can find a sweet spot that works both for Korea and the US,” he said.

Obama will confront the same trade and currency issues at the APEC summit, which is expected to move on creation of a Pacific-wide free trade zone that would encompass more than half the world’s economic output.

“The work that we do here is not going to seem dramatic. It is not always going to be world-changing. But step to step, what we’re doing is building stronger international mechanisms and institutions” that will help stabilise the world economy “and reduce tensions” among nations,“ Obama said.

“The easiest thing for us to do would be to take a passive role and just let things drift,” the president said.