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Obama Victory Fails to Thrill European Business

European citizens and political leaders welcomed President Barack Obama's re-election Wednesday. European money was less enthusiastic.

Many business executives and investors in Europe, like their counterparts in the United States, would have welcomed a president who was one of their own. They had more faith in Mitt Romney to steer the U.S. economy, by far the biggest market for European exports.

"The business community was clearly in favor of Romney, that's no secret," said Fred B. Irwin, president of the American Chamber of Commerce in Germany. "The business community felt that the Obama administration ignored them."

European stock markets initially showed little reaction to Mr. Obama's re-election Wednesday morning, then followed U.S. stocks down later in the day. The implication was that investors were unsure whether a second term for the president would bring growth that European companies, as well as U.S. firms with operations on the Continent, urgently need to help offset the dismal economy in the euro zone.

Newly pessimistic forecasts on the region's economy from the European Commission on Wednesday added to the gloom.

Many Europeans, who never quite seemed to understand that Mr. Obama could lose his bid for re-election, on Wednesday looked for more explicit American support for economic growth and took heart in the victory of a center-left president who favors activist government and a social safety net for all citizens.

In general, European experts expressed the hope that Mr. Obama would now, in a second term, deliver on the promises of his first campaign — a commitment to multilateralism and talks over the use of force, a negotiated deal with Iran, a better relationship with Russia and a major push for peace between the Israelis and the Palestinians, all issues of great concern to Europe.

And even in business circles there was, to be sure, relief Wednesday that American leaders had the election behind them and could now concentrate on urgent policy issues, particularly the looming "fiscal cliff" in Washington and the risk of a sudden drop in U.S. government spending. That would be an issue for companies like Siemens, the electronics and engineering company based in Munich that is a big supplier to the U.S. government.

But, based on Mr. Obama's first term, there was pessimism that he would put much priority on Europe or push forward economic projects that European businesses hold dear, like a trade agreement with the United States that would eliminate import and export tariffs, and unify regulatory approval for drugs and other products wherever possible.

Congratulations for Mr. Obama from European leaders often came wrapped around a plea for more attention to commercial ties between the two regions. "We must continue to remove unnecessary barriers to trans-Atlantic trade and investment," Martin Schulz, president of the European Parliament, said in a statement Wednesday.

But many simply expressed relief that in a time of economic crisis, there would be a continuity of American personnel and general lines of policy, in order to avoid the confusion and months-long delays that result before any new president takes office and finally gets his cabinet confirmed.

"It feels different this time," said Volker Perthes, director of the German Institute for International and Security Affairs in Berlin. "There's not much enthusiasm in Europe but there is quite an expectation that he will do what he promised to do, and what we expected him to do in the first term. The expectation now is that this time he will act for his legacy, not for re-election."

Europe's interest in a U.S. recovery was underlined Wednesday by new economic data. The European Commission forecast that the European Union would just barely crawl out of recession next year, while unemployment would remain high. In Germany, which has the largest economy in Europe, industrial production fell 1.8 percent in September from a month earlier, according to figures released Wednesday.

A sparkling U.S. economy would not solve Europe's deep structural and political problems, but it would help bolster demand for products ranging from Mercedes-Benz cars to Greek olive oil.

Despite the rise of China as a trading partner, the U.S. remains by far the biggest customer for European exports. Americans bought goods worth 172 billion euros, or $219 billion, from January through July, according to the most recent data from Eurostat, the E.U. statistics office.

Though many European business leaders felt affinity to Mr. Romney, there is little of the bitter animosity toward Mr. Obama found among U.S. conservatives. Indeed, Mr. Obama might find it easier to broker compromises with conservatives in Brussels than he does in Washington.

Photo: Getty Images

Martin Callanan, chairman of the European Conservatives and Reformists group in the European Parliament, said he had supported Mitt Romney, but added in a statement, "Our group has been pleased to enjoy a productive relationship with the first Obama administration and we look forward to working closely with the new administration in the interests of strengthening our many common interests."

European economists are especially nervous about Washington's so-called fiscal cliff — the automatic tax increases and huge spending cuts that could kick in early next year unless Mr. Obama reaches a compromise with Republicans in Congress.

Wolfgang Franz, who heads the German government's economic advisory panel known as the Wise Men, said he would urge Mr. Obama to start work immediately on reaching an agreement with Congress, warning that the consequences would have repercussions for economies across the globe.

"It is a question of whether the Democrats and Republics can reach a compromise," Mr. Franz said at a press conference in Berlin Wednesday. "I am personally rather optimistic, as the Americans have always succeeded in finding a solution, even if it has been down to the wire."

In Berlin and other capitals, there is considerable frustration about deadlock in Washington at the same time that the United States has criticized the way Europeans have handled their debt crisis. Mr. Obama has rarely visited Europe, but Treasury Secretary Timothy F. Geithner has been very active behind the scenes.

The attention was not always appreciated. Among German officials, there were complaints that Mr. Geithner's calls for less budget austerity were just designed to hold the euro zone together until the American election day to avoid a crisis that could hurt the U.S. economy and Mr. Obama's chances.

"But we've gotten used to Obama," said Mr. Perthes of the German Institute for International and Security Affairs. The German finance minister, Wolfgang Schäuble, "gets on with Geithner now, and everyone is used to Obama," Mr. Perthes said. "And since the euro crisis appears to be moving toward a resolution, continuity is good."

Mr. Geithner's kibitzing was more appreciated in France, which also has argued for less austerity.

"It is true that this isn't an administration that has Europe foremost at heart" because it has other concerns, Pierre Moscovici, the French finance minister, said Wednesday on RTL radio. "Nonetheless," he added, the Americans "have been of great assistance in addressing the euro zone crisis, and also in desiring a better balance between austerity and growth."

Mr. Geithner has signaled he will not remain during the president's second term. European leaders and business executives are hoping his successor will be more sympathetic to their interests.

"I would like to see someone who has a reputation and good business experience," said Mr. Irwin of the American Chamber of Commerce in Germany.

Whether Mr. Romney would have moved any more quickly is questionable. Mr. Romney's low popularity among European citizens, as shown by numerous opinion polls, could have been a problem for U.S. companies operating on the Continent if his presidency had led to a surge in anti-American sentiment, as was occasionally seen when George W. Bush was president. Europeans were also uneasy with Mr. Romney's bellicose rhetoric on Russia, Iran and China.

During the campaign, moreover, Mr. Romney painted Europe as a land of decadent socialists, and warned during the first debate with Mr. Obama that America's fiscal cliff threatened to transform the United States into Spain. That remark irked even some Spaniards who sympathized with Mr. Romney's views.

Xavi Cañigueral, a 27 year-old political adviser in Barcelona's city hall and a member of the conservative People's Party, said he preferred Mr. Romney because of his commitment to less government intervention.

Yet Mr. Cañigueral said Mr. Romney's critique of Spain annoyed him even if it was true. And he said Mr. Romney's statements on foreign policy had made him nervous. "Obama is more moderate," Mr. Cañigueral said. With him as president, "there is a better chance of countries getting along."

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