WASHINGTON, April 2 (UPI) -- Barack Obama's first overseas trip as president of the United States is already turning into a honeymoon from hell: The leaders of France and Germany are challenging him head-on, demanding a new global financial structure with far more regulation than Obama may be ready to agree to.
President Nicolas Sarkozy of France and Chancellor Angela Merkel of Germany were speaking with one voice as they headed into the Group of 20 major nations' summit in London to try to find solutions to the global economic crisis.
As the world's leaders gathered, Sarkozy and Merkel said they had a set of "red lines" that must be met for them to sign on to any end-of-meeting communique. Earlier, Sarkozy suggested he might walk out of the summit if French demands weren't addressed.
What Merkel and Sarkozy want is a check on bankers' pay, hedge fund regulation, a new look at tax havens and a trace on securitized assets sold around the world.
Sarkozy very pointedly said Europe would no longer follow the U.S. lead on all things economic. He and Merkel called for this G20 meeting to develop a "new financial architecture" and added that their demands on additional regulation were not negotiable.
Such a tone is not often heard in meetings of this level. The tone was especially surprising because Merkel and Sarkozy have both been strongly pro-American leaders, especially on security issues, when George W. Bush was president of the United States.
But their comments amount to a lot more than simple posturing to anti-American sentiment back home. Obama is personally enormously popular in Europe, especially in Germany. But Sarkozy and Merkel over the past year have both publicly and privately repeatedly expressed their lack of respect for him and their belief that he lacks sufficient experience and seriousness to provide a lead to Europe on key issues.
Ironically, Obama's most loyal ally in London remains British Prime Minister Gordon Brown, whom he humiliated on the prime minister's recent visit to Washington. Obama refused to throw a White House dinner for Brown and only gave him a shabby gift of 25 American movies that can't even play on British or European DVD players.
The French and German demands present Obama with a major problem. If he rejects them, he will split the G20 summit down the middle and lose any chance of getting worthwhile coordinated action out of it to deal with the world crisis. But if he bows to the Paris-Berlin diktat, then his prestige as leader of the United States and the Western world will be crippled and the leaders of France, Germany and other European nations will be encouraged to defy him further.
Also, imposing such draconian international regulations as the French and the Germans want won't play well with American investors and may drive Wall Street down, smothering the promising rally that boosted the Dow Jones industrial average by more than 20 percent in 13 days -- the best Wall Street recovery since the one of 1938 that heralded the beginning of the end of the Great Depression.
One point to bear in mind in the stimulus-versus-regulation debate is that the European countries are already spending a lot of additional money outside of their stimulus packages on what are known as "automatic stabilizers" -- provisions written into law to strengthen the social safety net spending in a recession. When you take this into account, the proportion of gross domestic product spent on measures to tackle the recession is not that different between the Europeans and the United States.
Even Brown, a big proponent of stimulus spending, has had to renounce the idea of further stimulus in Britain because of Bank of England and treasury concerns over the size of the debt and the fear that people will cease to buy it except at prohibitively high rates of interest.
Obama flew to London knowing he would have to measure up as a serious leader before heads of state from nations like Russia and China that have never accepted U.S. global leadership. But now his trillion-dollar stimulus and bailout spending plans have provoked head-on defiance from leaders who were previously among America's strongest allies. If Obama cannot face them down and force their respect, his stature on the world stage will be gravely diminished.