US suggestion for bigger EU rescue fund fails to ignite
US treasury secretary Timothy Geithner — in a highly unusual event — addressed the 17 eurozone finance ministers meeting in Poland and suggested they leverage the €440 billion European Financial Stability Facility to increase its lending capacity five times.
Minister Michael Noonan said it sounded like an interesting idea and he understood it was similar to what Mr Geithner had done in the US.
He had received a note explaining it and would study it in more detail.
But many of his fellow ministers were not so enthusiastic.
French diplomats said Mr Geithner should go home and clean his own house first before offering advice to the EU.
Austria’s finance minister, Maria Fekter, was equally outspoken. “I found it peculiar that even though the Americans have significantly worse fundamental data than the eurozone, and they tell us what we should do and when we make a suggestion ... they say no straight away”.
German finance minister Wolfgang Schaeuble said the only way to fund it would be through a financial transaction tax, since taxpayers would not be willing to put up more money.
Mr Geithner said he did not support such a tax.
Jean-Claude Juncker, who chaired the eurogroup meeting, told a press conference afterwards that they would not discuss increasing the EFSF with a non-member of the eurozone.
Mr Geithner, who made the decision just over three years ago to pull the plug on Lehman Brothers, was critical of what he described as “loose talk” by politicians and central bankers about dismantling the institutions of the euro.
Speaking to a gathering of policymakers and bankers, he said: “What is very damaging from the outside is not the divisiveness about the broader debate about strategy, but about the ongoing conflict between governments and the central bank and you need to work together to do what is essential to the resolution of any crisis.”
The ministers did not appear to make much progress on resolving the remaining disputes over the new Greek bailout.
The date for governments to have agreed the changes to the EFSF was moved from the end of September to mid-October as only five of the 27 countries have ratified it so far.
Agreement on giving Greece the next €8bn tranche of its loan was not reached either. The money is needed in early October to pay debts that fall due then. A procedure to meet Finland’s insistence on getting collateral against its contribution was nearing completion.
But whether and when the IMF mission will return to Athens is still unclear. European Commission experts remained behind when the inspector left earlier this month in protest over Greece not having met its targets.
CONNECT WITH US TODAY
Be the first to know the latest news and updates
