MARSEILLE, France (Reuters) - Treasury Secretary Timothy Geithner said on Friday that Europe must make every effort to show that it has the political will to support weaker euro area states as they pursue financial reforms.
Interviewed on Bloomberg Television in Marseille before attending a meeting of finance chiefs from Group of Seven industrial powers, he said European countries struggling with debt problems need “unequivocal” financial support from stronger states.
“It is completely within the capacity of the stronger members of the euro area to absorb those costs. Those costs would be much, much greater for them and their economies if they sit here and do nothing and they recognize that,” Geithner said. “So this is a good sensible financial calculation for them.”
His comments fit with a theme that U.S. policymakers have struck in the build-up to the two-day G7 gathering of finance ministers and central bank chiefs, urging Europe to come to grips decisively with the debt issues afflicting countries like Greece so that they don’t spread to other nations.
Geithner cautioned that financial markets should not have excessive expectations for the Marseille meeting, though he said all its members -- Britain, Canada, France, Germany, Italy, Japan and the United States -- want to act wherever they can to counter a global slowdown in growth.
“(Governments) are going to recalibrate and decide where they have room to look for things to do that can help strengthen growth and that’s going to come gradually over time but I don’t think you should expect any dramatic change in signals (from this G7 meeting),” he said, asked about potential new directions.
He added, “What we’re keen to do is explore ways we can help the Europeans get ahead of this (debt) problem ... we’re spending a lot of time trying to help them think through how best to manage this.”
President Barack Obama proposed a $447-billion job-creating program on Thursday night and Geithner promoted it on Friday as a potentially powerful stimulant for the U.S. economy, which in turn would benefit the rest of the world.
“If Congress were to act on this bill, it would have a substantial powerful effect on strengthening the economy that has slowed quite a bit and that would translate into hundreds of thousands of jobs for American workers at a time when we need that,” Geithner told National Public Radio from Marseille.
Though the G7 is no longer regarded as the premier forum for setting economic policy, having yielded that place to the larger Group of 20 which includes key emerging-market countries like China, its members still share common interests and consult constantly on global conditions.
A sense of heightened urgency hung over the Marseille talks about the necessity for finding ways to invigorate a struggling global recovery and ward off fears of renewed recession.
But officials noted the G7 gathering is one in a series scheduled for coming months, including one later in September among finance chiefs on the sidelines of the semi-annual gathering in Washington of the International Monetary Fund and World Bank.
G20 finance ministers will also meet in Paris on Oct 14-15, providing another opportunity to seek better policy coordination. For the moment, Geithner said Europe needs to act to calm fears that its debt problems could become uncontrolled.
“It’s absolutely in the interests of the United States and the Europeans to do whatever they can to ... calm the pressure down that’s now spreading across Europe,” he said.
Additional reporting by David Lawder in Washington; editing by Patrick Graham