Geithner to lobby Europe leaders before summit

Fri Dec 2, 2011 3:44pm EST
 
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By David Lawder

WASHINGTON Dec 2 (Reuters) - Treasury Secretary Timothy Geithner will travel to Europe next week to lobby key leaders and officials ahead of a make-or-break summit aimed at halting contagion from Europe's growing debt crisis.

Geithner will meet with French President Nicolas Sarkozy, new Italian Prime Minister Mario Monti, and Spanish Prime Minister-elect Mariano Rajoy on the December 6-8 trip, which will -include stops in Frankfurt, Berlin, Paris, Marseille and Milan, the Treasury said in a statement on Friday.

Geithner has been urging European leaders for months to erect credible backstops for both euro-area governments and for banks under market pressure from the debt crisis.

Both Geithner and President Barack Obama have expressed concern that a wider crisis would hurt U.S. growth. The Treasury chief has said he wants Europe to eliminate the threat of "cascading defaults."

The Treasury's chief economist, Jan Eberly, on Friday said a European recession brought about by the debt crisis would pose serious risks to the U.S. economy, with 15 percent of total U.S. exports going to the euro-zone's 17 member countries.

"That's a substantial exposure from U.S. economy to what happens in Europe, so that's absolutely a source of concern," Eberly, the assistant secretary for economic policy, told reporters.

She added that the United States should continue and expand its fiscal support in the face of such risks from Europe.

Geithner will start his trip in Frankfurt, where he will meet with European Central Bank President Mario Draghi and Bundesbank President Jens Weidmann. The ECB under Draghi, who took the bank's helm at the start of November, has shown willingness to take bolder steps to ease the crisis.   Continued...