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G-8 leaders call for measures to spark economic growth, cut debt

Confronting an economic crisis that threatens Europe and the U.S., President Obama and leaders of seven other world powers declared Saturday that their governments must both spark growth and cut the debt that has crippled the European continent and put investors worldwide on edge.

"There's now an emerging consensus that more must be done to promote growth and job creation right now," Obama said after unprecedented economic talks at Camp David.

Seeking a second term amid hard economic times, Obama hailed a debate now heading in the direction he likes, with nations talking of ways to spark their economies instead of just slashing spending.

Yet there were no bold prescriptions at hand. Instead, leaders seemed intent on trying to inspire confidence by agreeing on a broad strategy despite their differences. With all of them facing their own difficult political realities, they built some wiggle room into their pledge to take all necessary steps, saying "the right measures are not the same for each of us."

Obama played international host as Europe's debt crisis threatens to drag down the U.S. recovery and his own political future, underscoring the stakes for him in getting allies abroad to rally around some answers.

Much of the new emphasis on government-led growth seemed aimed at German Chancellor Angela Merkel, who came to the summit as the European leader who had demanded austerity as the most important step toward easing the eurozone's debt crisis. But the recent election of Socialist Francois Hollande as president of France and Greek elections were clear rejections of the belt-tightening Merkel represented.

On another matter, the leaders set the stage for a united release of world oil reserves to balance any disruption in global markets when tough new sanctions are imposed on Iran's exports because of its disputed nuclear program. The leaders said they were ready to take "appropriate action" to meet any shortages.

The mere preparation to release oil reserves could help calm markets and ensure that oil prices, which have been dropping in the wake of the Greek crisis, don't climb again and anger consumers as U.S. elections approach.

The Group of Eight summit included leaders of the United States, Japan, Britain, Germany, France, Italy, Canada and Russia.

A joint summit statement reflected how urgently the countries must contain a financial crisis that could spread from the eurozone to the United States and infect the rest of the global economy. They declared unanimity in ensuring that Greece, which is crippled in debt and politically gridlocked, remains as part of the 17-member euro currency union.

"The leaders here understand the stakes," Obama said in summing up a packed day of talks. "They know the magnitude of the choices they have to make and the enormous political and economic and social costs if they don't."

Merkel said growth and deficit-cutting reinforce each other and that everyone around the table agreed. "That is great progress," she said.

As for promoting growth, she said investments under consideration include research and development, Internet networks and infrastructure. But she said "this doesn't mean stimulus in the usual sense."

U.S. officials agreed, saying measures that the Europeans might pursue don't all require only government spending and could be in the form of public-private partnerships or in initiatives designed to loosen credit.

"The global economic recovery shows signs of promise, but significant headwinds persist," G-8 leaders said.

The tension between austerity and growth -- whether to slash debt by cutting budgets or use public money and other means to help spur economic growth -- was the backdrop as Obama welcomed an emerging push for balance.

He seized the opportunity to cast the debate in terms favorable to his own re-election, closing the summit with the steps he took to right the U.S. economy and his economic vision for a second term. He said he was confident Europe could get on a path to recovery as has the United States.

"We know it is possible in part based on our own experience here," he said. "In my earliest days in office, we took decisive steps to confront our own financial crisis."