WASHINGTON—U. S. Treasury Secretary Jacob Lew on Thursday
pressed his counterparts in Germany and France to ensure Greece's
debt is made sustainable as eurozone creditors negotiate a new
emergency-financing package for the country.
The U.S. is concerned the eurozone's debt-relief efforts will be
insufficient to fix Greece's economic woes as Germany continues to
question the need for a debt restructuring. Mr. Lew's unscheduled
visits to Berlin and Paris Thursday are designed to ramp up the
pressure on Greece's creditors. Although the administration sees
recent efforts by Athens and its creditors as creating the
conditions for Greece to stay in the eurozone, Washington is still
concerned about the risks of an exit from the currency union.
Mr. Lew "underscored the importance of achieving debt
sustainability in the upcoming negotiations," the Treasury
Department said in an readout of talks.
Without some form of debt restructuring, a senior U.S. Treasury
official said, "this problem will just come right back."
Although administration officials say the U.S. and Europe are
far more insulated against potential fallout from a Greek exit than
in previous years, Washington is still fearful it could spur
volatility in markets and undermine weak global growth. The U.S. is
also concerned about broader political ramifications for its
closest allies.
"Secretary Lew said such a path is in the best interests of
Greece, Europe, and the global economy," the Treasury department
said.
Debt-relief is at the heart of talks now that Athens has passed
controversial austerity measures designed to assure creditors the
government is committed to reining-in spending and will deliver on
a host of other economic overhauls.
Eurozone authorities have promised to discuss reducing Greece's
debt burden if Athens meets creditor demands. Absent stronger
debt-relief commitments, Washington is worried Athens won't be able
to persuade the public to support the economic policies creditors
are requiring.
But the currency union's fiscal hawks, led by Germany, have
ruled out a strategy many economists say would be the most
straightforward way to cut Greece's mountain of debt: Writing down
of the face-value of the government bonds Europe holds. Berlin has
said it is open to considering extending the maturity of those
bonds, but disagrees with its other creditors about the extent of
debt relief needed and says a better option may be to let Greece
leave the euro.
"If all the steps are taken, there will be a very serious effort
on restructuring the debt," a senior Treasury official said.
"Whether it will go far enough is a different question."
Using its own dwindling leverage in bailout negotiations, the
International Monetary Fund is also pushing the eurozone for a
large-scale restructuring. Fund officials have warned the eurozone
it won't join the bailout without substantial debt relief.
Germany says the IMF's assessment is too dour, however.
The senior U.S. official said the IMF's decision to make public
a report detailing the critical state of Greece's economy, a move
fund-watchers called highly unusual for the institution, should
help shape debt-discussions in the eurozone.
Stacy Meichtry contributed to this article.
Write to Ian Talley at ian.talley@wsj.com
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