At eurozone meeting, ministers find unity only in rejecting Geithner
At a meeting of European finance ministers in Poland, leaders largely rejected proposals from Treasury Secretary Timothy Geithner on how to rescue the ailing eurozone.
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Investors in global markets pinned a lot of hope on the two-day meeting, expecting it to provide a message of unity and strong governance within the monetary union. But at the end of day one, analysts say so far this message still can’t be heard. Instead, many say, a new level of dissent has emerged, this time between Europe and the US.
In a sign of growing international concerns about the crisis, US Treasury Secretary Timothy Geithner took part in the talks.
According to the Dow Jones news agency, Mr. Geithner urged his EU colleagues to overcome their divisions on how the debt crisis should be solved. He reportedly said: "What's very damaging is not just seeing the divisiveness in the debate over strategy in Europe but the ongoing conflict between countries and the European Central Bank."
His remarks were not received well. Austrian Finance Minister Maria Fekter seemed to speak for most of her colleagues when she said, rather frankly: "I found it peculiar that even though the Americans have significantly worse economic data than the eurozone, they tell us what we should do."
But observers of the talks sided with Geithner. “What we should get from this meeting in Wroclaw is a clear roadmap on how to solve Europe’s debt crisis,” says Jan Randolph, Director of Sovereign Risk with the IHS information service in London. “They have to stop the mixed signals coming from policy makers. But we might be disappointed.”
The so-called Ecofin meeting – a monthly gathering of European finance ministers plus the head of the European Central Bank and the EU’s finance commissioner – had several issues on the agenda:
• When to hand out fresh money to Greece to help it avoiding insolvency
• Whether to accept Finland’s demand Greece should provide some form of collateral for any further credit
• How and when to enlarge the European rescue fund (EFSF) which has been created to help other eurozone members in financial trouble
• And whether Europe should follow America’s example and put up an economic stimulus plan.
Behind all these issues is the question of the eurozone’s future: Can it survive without member countries giving up sovereign powers like budgetary and fiscal authority.