STEVE INSKEEP, Host:
Even as the presidential campaign intensifies, the economic situation is rapidly evolving. American officials are closely watching a crisis in Europe, where Greece is close to default on its debts, other countries are under pressure, and the entire zone that uses the euro is deciding what to do. U.S. officials have offered advice. As NPR's Jackie Northam reports, that takes diplomatic skill as well as financial expertise.
JACKIE NORTHAM: With all the concern over the ailing economy here in the U.S., the debt crisis that's been consuming Europe used to seem a long away. But not anymore. The alarm bells that were only a faint tinkle a few months ago are now clanging loudly. Yesterday, Olli Rehn, the European commissioner for economic and monetary affairs, was in Washington to give his assessment of the debt crisis.
OLLI REHN: It's important for Americans to understand what's going on in Europe. U.S. reactions to Europe's sovereign debt crisis have typically expressed incomprehension - right or wrong.
NORTHAM: But the Obama administration insists it's fully aware what's happening in Europe. Nigel Gault, the chief U.S. economist at IHS Global Insight, says there are several reasons why the European debt crisis should worry Washington.
NIGEL GAULT: Firstly, we have important trade links with Europe. So, if this crisis leads to Europe going into recession, that's very bad news for U.S. export prospects. Secondly, U.S. has got a lot of investments in Europe. It's the biggest place for U.S. direct investment abroad.
NORTHAM: More importantly, Gault says, there could be a serious spillover to the already fragile banking system in the U.S. Treasury Secretary Timothy Geithner has been the most visible American official working to contain the euro crisis. Last week, he had an unprecedented meeting with finance ministers of the eurozone, the countries that use euro as a common currency. But Geithner's advice was not well received or appreciated by some of the ministers, who complained they were being lectured to. Robin Lumsdaine, a professor of international finance at American University's Kogod School of Business, doubts that was Geithner's intent.
ROBIN LUMSDAINE: A lot of times we in the U.S. like to share our experience or views, and sometimes that can come across quite forcefully. I think any time you have any kind of international discussions, there has to be some layer of diplomacy in there. I think it's even more delicate now when you have scarce resources.
NORTHAM: IHS's Gault says Geithner must be frustrated. He learned from America's economic crisis three years ago that timing is everything when you're trying to contain the problem
GAULT: He certainly is going back to U.S. experience and saying you need to act fast on these things. You can't let events spin out of control. Up until now, the Europeans have been behind the curve all the way through.
NORTHAM: Gault says Geithner wants Europe to take more decisive action to get ahead of events. But the problem is the eurozone is made of 17 nations. He says getting each of them to agree on a course of action is very difficult. Analysts say the U.S. relationship with European nations is generally stable, but Washington has focused on other areas of the world in recent years: China, the Middle East, emerging nations. Still, American University's Lumsdaine says she wouldn't say the U.S. took Europe for granted.
LUMSDAINE: The more confident one is in the strength of a relationship, the less time one feels one needs to spend to sort of coddle that relationship. And I think perhaps that's the situation with Europe. They've been our solid partners for so long, and we're quite confident in that relationship, even as there are challenges.
NORTHAM: Lumsdaine says the situation where the U.S. is pulling all the strings or bullying its European partners isn't a long-term solution. For now, she says, all the U.S. can do is advise, and much of that will be done in private. Jackie Northam, NPR News, Washington.