Meetings on European Debt Crisis End in Debate, but Little Progress

The meetings were highlighted by the appearance by Timothy F. Geithner, the United States treasury secretary, whose advice, and warnings, drew a tepid reaction from the euro zone’s finance ministers. And Mr. Geithner’s rejection Friday of a European idea for a global tax on financial transactions prompted a debate about whether Europe should go ahead on its own.

Meanwhile, with an October deadline looming for international lenders to agree to the release of around 8 billion euros, or $11 billion, of aid to Greece, without which it could default on its debt, George Papandreou, the Greek prime minister, canceled a trip to the United States.

“The coming week is particularly critical for the implementation of the July 21 decisions in the euro area and the initiatives which the country must undertake,” Mr. Papandreou said in a statement on Saturday.

The attendance of an American official at Friday’s meeting was unusual, and Jacek Rostowski, the finance minister of Poland who invited Mr. Geithner, said it showed “unity within the transatlantic family.”

That glossed over the grumbling about Mr. Geithner’s comments from several European ministers Friday, including Maria Fekter of Austria, who publicly said she was unimpressed with Mr. Geithner’s contribution.

Yet the American plea for urgent decisions to shore up the euro zone was echoed Saturday by two European ministers whose nations have stayed outside the single currency.

“The euro zone leaders know that time is running out, that they need to deliver a solution to the uncertainty in the markets,” said George Osborne, Britain’s chancellor of the Exchequer, who told the BBC he wanted action over Greece and the “weakness” in Europe’s banking system.

“The problem is that the politicians seem to be behind the curve all the time,” added Anders Borg, Sweden’s finance minister. “We really need to see some more political leadership,” he said, citing a “clear need for bank recapitalization.”

Almost two months after a deal was struck on a second bailout of Greece, Finland is holding up its implementation by requesting collateral for new loans — a demand that has complicated the negotiations.

Meanwhile, the Greek government must still convince international lenders that it has done enough to justify the release of the next round of aid.

One European official, not authorized to speak publicly, said the ministers “seemed to come to no operational decisions at all.” The only positive news was an outline agreement on new laws to tighten the rulebook for the euro — though that was struck in Brussels.

Saturday’s meeting ended promptly around noon, allowing ministers to leave before a demonstration in Wroclaw against austerity measures in Europe.

But Mr. Geithner’s contribution continued to reverberate after his departure on Friday. Though there was no discussion of it in detail, his idea of increasing the firepower of the 440 billion euro ($608 billion) bailout fund through leverage — as the United States did in some programs in 2008 — prompted debate, but not consensus.

Some European countries consider such a financial transaction tax a way of ensuring that the financial sector contribute to ending the crisis, but others oppose it.

After Mr. Geithner’s comments, Belgium’s finance minister, Didier Reynders, called for Europeans to press ahead.

“I’m sure that if it’s impossible at the worldwide level, we’ll need to organize that in the E.U. and at least in the euro zone, but of course with a lower level of taxation in one jurisdiction than on the worldwide level,” he said.

Mr. Borg ruled out Swedish participation. “We have substantial experience in Sweden,” he said. “Basically most of our derivative and bond trading went to London during the years we had a financial transaction tax, so if you don’t get a solution that is universal, it is very likely to be detrimental for European financial markets.”

Article source: http://www.nytimes.com/2011/09/18/business/global/meetings-on-european-debt-crisis-end-in-debate-but-little-progress.html?partner=rss&emc=rss