US treasury chief to push growth in Europe

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Washington - US concerns about Europe's lagging economic recovery and its focus on austerity will top the agenda of the US treasury secretary next week when he meets with key European finance and economic officials.

On his first official trip to Europe as treasury secretary, Jacob Lew will be meeting top European finance and political officials Monday in Brussels and Frankfurt and his German and French counterparts on Tuesday in Berlin and Paris.

The risk of global financial contagion from the struggling financial sectors in the eurozone is a top concern.

“Our stake in Europe's health ... is immense,” a senior Treasury official said in a Friday briefing.

A risk to Europe is a risk to the United States, she said, speaking on condition of anonymity.

There will be little new in Lew's message to the eurozone. Washington has been pushing Europe and particularly Germany for aggressive intervention in the economy since the 2008 global financial crisis, with little success.

Without specifying Germany and its insistence on austere cutbacks in struggling countries, the official said that nations with economic surpluses should help “avoid austerity fatigue” by contributing more to solving the eurozone problems.

“The playbook in the United States was very strong, aggressive early action on the banking system to help banks build much stronger capital buffers and manage liquidity much more effectively, and strong fiscal support for recovery,” the official said.

The US economy has expanded for the last 14 quarters, and the private sector has been adding jobs for 37 consecutive months.

Europe, which rejected strong fiscal intervention, has record unemployment, and one-third of the eurozone has shrinking economies and budgets, the US official noted.

Recent events in Cyprus “remind us that Europe continues to have a challenging path of financial reform” ahead of it, the official said. “What is clear is we are seeing very weak demand in Europe and rising levels of unemployment.”

Eswar Prasad, professor at Cornell University in Ithaca, New York, said he expects Lew to prod European officials to limit financial market contagion, and to express US opposition to a proposed financial transactions tax.

“Lew's trip to Europe comes at a critical juncture for the US economy,” Prasad, a former International Monetary Fund official, told Bloomberg financial news. “A flare-up of the eurozone debt crisis could create turmoil in global financial markets and set back the fragile US recovery.”

The proposed Transatlantic Trade and Investment Partnership will be on the agenda, too, with US interests in exporting to Europe a key issue and “important drive” of the US economic recovery.

“We will seek an ambitious, comprehensive and high-standard agreement,” the Treasury official said, including full elimination of tariffs.

Lew will meet Monday in Brussels with European Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso, European Commissioner for Economic and Monetary Affairs and the Euro and European Commission Vice President Olli Rehn, and European Commissioner for Internal Markets and Services Michel Barnier.

European Central Bank President Mario Draghi is to meet with Lew in Frankfurt.

On Tuesday, Lew will travel to Berlin for talks with German Finance Minister Wolfgang Schaeuble before heading to Paris to meet with French Finance Minister Pierre Moscovici.

“Secretary Lew will want to share his experiences and insights from the very strong actions taken here,” the Treasury official said. - Sapa-dpa



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