December 2, 2011 / 8:45 PM / 6 years ago

Geithner to lobby Europe leaders before summit

3 Min Read

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.

Among steps likely to be discussed at the December 9 European Union summit is greater ECB purchases of euro-zone sovereign bonds, an action that Germany wants tied to tougher budget controls for bloc members.

Geithner will meet with German Finance Minister Wolfgang Schaeuble in Berlin before traveling to Paris on December 7 to meet with Sarkozy and French Finance Minister Francois Baroin. Later that day he will fly to Marseille for a meeting with Rajoy. He will meet with Monti on December 8 in Milan before returning to Washington.

Geithner will not stay for the EU summit in Brussels, which follows a string of half-measures agreed to by European leaders over nearly two years. Those measures failed to stop bond market contagion spreading from Greece to Ireland, Portugal and now Italy and Spain.

In September, Geithner attended an EU finance ministers meeting in Poland to urge more fiscal stimulus and suggest ways the firepower of the European-International Monetary Fund bailout facilities could be boosted. While a number of ministers welcomed his input, some gave him a cool reception.

Reporting by David Lawder, Editing by Chizu Nomiyama, Andrew Hay, Leslie Adler

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