GREEK PRIME minister George Papandreou said US president Barack Obama had expressed support for the measures being taken to deal with the fiscal crisis in Greece.

Mr Papandreou said after meeting with Mr Obama at the White House that he also got a “positive response” from the US president about European initiatives to curb market speculation and that the matter will be on the agenda for the next meeting of the Group of 20 nations. He said he had not asked Mr Obama for any financial assistance.

European Commission president José Barroso said yesterday that the EU would consider banning “purely speculative” credit-default swaps. Mr Papandreou, who is on a three-day visit to Washington, warned in a speech yesterday that the crisis in his country posed financial risks to the US as well as to the EU.

Obama administration spokesman Robert Gibbs said that the administration believed the EU should take the lead in dealing with the Greek crisis.

Greece’s debt crisis may lead to slower US growth, a rising dollar and turmoil in credit markets that may make it more difficult for cash-strapped states such as California to borrow.

There will be “a slower recovery in terms of job creation and these Greek-type issues don’t help”, said Simon Johnson, a former chief economist at the International Monetary Fund.

Because Greece is in the European Union, he said, “the action items are not so clear for the US”. Mr Johnson said that whatever the outcome of a possible EU bailout of Greece or whether the debt crisis spreads to other countries, the turmoil could cloud the US economic and fiscal picture.

This would create additional challenges for President Obama as he struggles with a recovering economy, high unemployment and a federal budget deficit that the Congressional Budget Office said would total $9.76 trillion over the next 10 years. In a speech at the Washington-based Brookings Institution yesterday, Mr Papandreou said the Greek crisis posed a financial risk to the US.

“For America, a weak euro means a rising dollar; that, in turn, means a rising US trade deficit,” he said. If the EU, the US’s biggest trading partner, “should falter, the consequences here would be palpable”.

President Obama has been receiving briefings on Greece as part of his daily economic update. Publicly, administration officials have limited their comments to expressing confidence that Europe will handle the crisis.

The Greek prime minister began his visit to the US after meeting with French and German leaders. He told President Obama about the steps the Greek government was taking to address the crisis.

“We’re not asking for a bailout,” Mr Papandreou told reporters at the White House after the meeting. After a meeting with Mr Papandreou yesterday, US secretary of state Hillary Clinton said he had not asked for financial help.

The Greek leader also met with congressional leaders and US treasury secretary Timothy Geithner during his trip.

Mr Papandreou said yesterday that if the turmoil in Greece “metastasises” it “could create a new global financial crisis with implications as grave as the US-originated crisis two years ago”. – (Bloomberg)