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Who's running Europe? Now Obama pressures Spain over cuts after whispers he advised Merkel on saving the euro
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Barack Obama is pressuring Spain to make austerity cuts as the European debt crisis rumbles on, it has emerged.

The U.S. President has also been credited with helping to save the Euro, after giving advice to European leaders on how to handle the debt crisis.

U.S. officials have been adamant that Europe must take the lead in resolving the crisis.

But amid fears for the impact on the American economy, behind closed doors the U.S. has been taking a far more active role.

Mr Obama and his aides have privately pressured European leaders to take bold action to calm the storm in financial markets.

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Yesterday he called Prime Minister Jose Luis Rodriguez Zapatero to discuss the importance of 'resolute action' by Spain.

Spain's public finances, along with Portugal's, have caused the most concern after those of Greece, which secured a European bailout.

The White House said Mr Obama was actively engaged in ensuring that Europe's debt crisis did not hurt the global economy.

There are fears that the state of the economies in Portugal, Spain, Italy and Ireland - who all currently have high levels of debt - could stall the U.S. economy just as it was beginning to improve.

Former Treasury and White House official Tony Fratto said: 'We're in a slow growth recovery. It would not take much to get growth down to zero or 1 per cent.'

Mr Obama has held phone calls with German Chancellor Angela Merkel and French President Nicolas Sarkozy about the European crisis in recent days.

The message was clear: Act boldly.

American officials urged that Mr Sarkozy and Mrs Merkel recall the U.S. lesson of 2008-2009 when the Bush administration persuaded a reluctant Congress to approve a massive $700 billion Troubled Asset Relief Program.

While politically unpopular, the U.S. rescue plan convinced markets that authorities were serious about keeping banks afloat.

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White House spokesman Robert Gibbs said administration officials continue to urge European officials to 'do what's necessary to ensure that this problem is dealt with and doesn't spread.'

A senior administration official told the New York Times newspaper: 'He was trying to convey that he knew these were politically difficult steps that the leaders there had to take, that he had gone through them as well.

'And that, from his experience, trying to get out ahead as much as possible was the right way to go.'

A White House official added: 'They discussed the importance of the members of the European Union taking resolute steps to build confidence in the markets.

'The president also spoke to Chancellor Merkel on Friday and has spoken to her periodically on this issue over the past several weeks.'

William Galston, a former aide in the Clinton administration, said: 'My assumption is that the president made a judgment that the risks are too high to continue slow incremental action and at that point he said, "Hey guys we all have a stake in this."

'Clearly the president wouldn't have acted like he did out of pure altruism. He's worried about the linkage to our economy.'

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Mr Obama's call yesterday to Mr Zapatero added an American voice to European pressure on Spain.

Mr Zapatero has so far shied away from structural reforms opposed by trade unions but is now facing new calls from EU leaders to slash spending again and tackle his country's economic crisis.

Mr Gibbs said Spain was 'one of the countries that ... because of some of their problems, need to undertake reforms that the prime minister is starting to work through.'

European Union and International Monetary Fund officials pledged 750billion Euro of emergency aid to weak euro zone countries early on Monday in return for action.

The Spanish government said it would not draw on any of the emergency funds but promised on Monday to cut the budget deficit by a further 15billion Euros, 0.5 per cent of gross domestic product, by 2011.

Labelling the European debt crisis a 'wake-up call' for Americans, lawmakers also said Federal Reserve Chairman Ben Bernanke had helped explain why the U.S. central bank was going to be using special 'swap lines' to aid its European counterparts.

The swap lines ease pressure on European banks by letting them swap euros for dollars, if necessary, on short notice to handle emergency situations.

Following a closed-door briefing by the Federal Reserve chief, Senator Richard Shelby of Tennessee said: 'Chairman Bernanke explained what was going on in Europe, it was basically a European problem but with ramifications, probably, on a lot of our banks and our banking system if there was no intervention.'

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