US, France forge growth position heading into G8

(WASHINGTON) - The United States and France firmly agreed on the need for strong pro-growth policies to loosen an austerity straitjacket Friday, ahead of a G8 summit darkened by the eurozone crisis.

US President Barack Obama and new French President Francois Hollande used their first meeting in the Oval Office to press for action as Greece threatens to tumble out of the euro and unleash wider financial contagion.

Obama, who is facing a tough re-election campaign in a difficult economic climate, said that events in Europe held "extraordinary" importance for the United States, which unlike the eurozone is growing, albeit slowly.

He said that the G8 summit which he will convene at his Camp David retreat later Friday would discuss "a responsible approach to fiscal consolidation that is coupled with a strong growth agenda."

Hollande, who made easing austerity a centerpiece of his winning election campaign against ex-president Nicolas Sarkozy, took a similar line, which could provoke disagreement at Camp David with German Chancellor Angela Merkel.

"Growth must be a priority," said Hollande, saying both he and Obama had reached the same conclusion and were also of the same mind on Greece, as fears mount that the debt-laden nation could crash out of the euro.

"We both believe that Greece must stay in the euro zone," Hollande said.

Greece's plight is expected to dominate the Group of Eight industrialized nations summit, which will also focus on Iran's nuclear challenge, Syria's crackdown on dissent and wider issues like climate change and energy.

US officials said that Obama will raise "specific" actions that could be taken at the G8 summit to alleviate the crisis in Europe.

But his leverage may be severely limited by the fact that he is in a tough political spot himself, and has no leeway to offer any financial muscle to Europe as it battles its currency and debt woes.