U.S. Treasury Secretary Jack Lew is on his way to Europe to urge policymakers to keep the Greek rescue on track. Lew will visit Frankfurt, Berlin and Paris over the next two days for talks on the deal with Greece with senior financial officials, including the President of the European Central Bank Mario Draghi and finance ministers of France and Germany.
His trip comes at a critical moment in the Greek crisis, with the country’s parliament due to vote today on wide-reaching reforms and spending cuts and a day after the International Monetary Fund called for significant debt relief— in direct opposition to the European position.
Lew, in a statement which was distributed by the Treasury Department after a phone call with Greek prime minister Alexis Tsipras after the intense negotiations commenced in Brussels on early Monday morning, referred to the issue of making Greece’d debt sustainable.
“Secretary Lew noted that he is closely monitoring the discussions in Brussels and has been encouraged by reports of some progress, though additional work clearly remains.
“He noted that Greece has made substantial movement and demonstrated the political will to implement difficult reforms and that continued flexibility will be required by all parties.
“Secretary Lew underscored that rebuilding trust requires demonstrating that a program will be implemented and that there will be measures to make the debt sustainable.
The US has been pressuring EU leaders to solve the crisis out of concern for the stability of the economic situation in Europe and the geopolitical consequences of Greece leaving the eurozone.
“There’s a lot of unknowns if this goes to a place that completely melts down in Greece,” Lew said last week. If that happened, Lew said, “it’s geopolitically a mistake.”
Lew’s comments were the first forceful acknowledgement from the Obama administration that it too sees a Greek exit as a geopolitical threat and not just an economic risk.
Finally, someone in a position of power is starting to see the other side of the issue, that the question of European unity and global economic stability is at stake. Unsustainable debt which leads to austerity measures that will lead nowhere but a further increase of debt makes no economic sense and I am not an economist. If these measures will only lead to further political instability in an area of the world which is hemmed in by states in chaos, then this instability will spread. It is time that German political leaders sold their electorate a different paradigm, and see the problems in Greece as problems in the constructon of the euro and in the frenzy of careless lending that ensued. Unscrupulous creditors must slso bear the burden of a debt restructure.