It was an unprecedented visit designed to spur the euro zone into action. But Treasury Secretary Timothy Geithner’s high-profile trip to Europe left some European officials more dumbstruck than star-struck.
Mr. Geithner’s decision to travel to the small city of Wroclaw to discuss the sovereign debt problems of Greece, Ireland, Italy and the wider euro zone was the clearest indication yet of the severity of the near two-year-old crisis, which now threatens the global economy not just the single currency bloc.
Officials said Mr. Geithner was coming to propose how the region might try leveraging its emergency bailout fund – the €440 billion European Financial Stability Facility – to better tackle the crisis, much as the United States used leverage to handle the fallout from the subprime collapse.
But however good Mr. Geithner’s intentions, the indications were that the meeting did not go as smoothly as he might have hoped.
Held in a concert hall, the gathering lasted for about 30 minutes. The euro zone ministers arrived together by bus. Mr. Geithner was sped to the doors in a private car.
There was no word on whether voices were raised or what the temperature of the exchanges was, but Austria’s finance minister, for one, was less than warm to Mr. Geithner’s message.
“I found it peculiar that even though the Americans have significantly worse fundamental data than the euro zone that they tell us what we should do and when we make a suggestion … that they say no straight away,” Maria Fekter told reporters afterwards.
Although some dropped hints of disagreement behind the meeting’s closed doors, few were prepared to disclose Mr. Geithner’s full prescription to heal the euro zone crisis.
But his language was perhaps too blunt for European ministers, fatigued by the crisis and the countless disagreements it has prompted amongst them.
“I’d like to hear how the United States will reduce its deficits … and its debts,” Belgian Finance Minister Didier Reynders said somewhat tartly.
Jean-Claude Juncker, the chairman of the Eurogroup, was even more to the point.
“I don’t think it would be wise for me to report from an informal meeting that we have with the treasury secretary. We are not discussing the expansion or increase of the EFSF with a non-member of the euro area,” he said.
The clearest sense of Mr. Geithner’s thoughts came after the meeting, when he briefed policy makers and bankers on his views of the crisis.
“Of course, your financial challenges in Europe are within your capacity to manage financially, you just have to choose to do it,” Mr. Geithner told the audience, sitting cross-legged and slightly slouched in his chair.
“And that is why I said how important it is to us that Europe doesn’t face a protracted period of weakness,” he said, answering a series of polite questions delivered by Polish Finance Minister Jacek Rostowski.
“One of the starkest ways to emphasize the importance of Europe getting on top of this is that you don’t want the future of Europe to rest in the hands of those who provide financing to the IMF,” Mr. Geithner said.
“There is no reason for Europe to be in that position and it would be very damaging to the credibility of the endeavour here in Europe,” he said, before departing to warm applause.
But his frank tone and warnings of “catastrophic risk” is unsuited to European diplomacy.
For many in the meeting, Austria’s Ms. Fekter most particularly, his message fell flat.
“I had expected that when he tells us how he sees the world that he would listen to what we have to say,” she said.