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December 05, 2011

Geithner Says Plan to Resolve Euro Debt Crisis Must Succeed

by Lisa Bryant

U.S. Treasury Secretary Timothy Geithner called on Europe to forge a closer fiscal and monetary union, as he began a three-day European tour to push leaders for decisive action on the region's spreading debt crisis.

Speaking to reporters in Germany, U.S. Treasury Secretary Timothy Geithner said he was encouraged by recent developments, notably a plan outlined by French and German leaders to strengthen economic ties and accountability among members of the 17-nation eurozone.

"I am here in Europe, of course, to emphasize how important it is to the United States and to the world economy as a whole that Germany and France succeed alongside the other nations of Europe in building a stronger Europe," he said.

Geithner spoke two days before a key summit of European Union leaders, who are under pressure to take decisive action to fix the region's sovereign debt and currency crisis.

Despite a plan that French President Nicolas Sarkozy and German Chancellar Angela Merkel will present at the Brussels summit on Thursday, rating agency Standard & Poor's warned it could lower the ratings of 15 European nations -including financial powerhouses France and Germany.

But Geithner played down suggestions that the U.S. Federal Reserve could step in to help out the eurozone indirectly - via the International Monetary Fund. He said a report suggesting this was not accurate.

"Of course, the IMF has a role to play in this and we will continue to support ... the fund in the context of the efforts the Europeans are making to build a stronger Europe," Geithner said.

Geithner holds a flurry of meetings with top European officials in the coming days. He met with the head of the European Central Bank and Germany's finance minister on Tuesday. On Wednesday, he is in France for talks with President Sarkozy and Spain's incoming prime minister, Mariano Rajoy. On Thursday, he heads to Italy for more discussions with new Prime Minister Mario Monti.

Geithner has made several visits to Europe this fall, underscoring U.S. concerns that Europe's fiscal problems could spread overseas. Some European officials have given him a cool reception in the past.

Analyst Philippe Moreau Defarges, of the French Institute of International Relations, does not expect this trip to be any different.

"Mr. Geithner will be in Europe to put pressure on the European leaders, but he won't get anything because the United States is weak and Mr. Obama is weak too," he said.

In August, S&P downgraded the U.S. credit rating for the first time, from its top AAA rank to AA+, over concern about Congress' fiscal reduction plan.