23rd Oct 2016

US keen for Germany to lead EU out of crisis

US treasury secretary Jack Lew on Tuesday (9 April) hinted that Germany should boost its internal demand to help Europe get out of the crisis.

But German finance minister Wolfgang Schaeuble said Berlin has no need for US tutelage.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

  • Lew (r) - the US has an 'immense stake' in seeing the euro-crisis come to an end (Photo: Joerg Rueger/German ministry of finance)

"We need to balance policies of growth and fiscal consolidation. The driving force behind any recovery is consumer demand, so any policies to help encourage consumer demand in countries that have the capacity would be helpful," Lew said during a joint press conference with Schaeuble in Berlin.

Germany has a policy of keeping down wages in order to make it a more attractive location for manufacturers and exporters.

But the low pay stymies growth in German domestic consumption.

At the same time, its firm policy on avoiding inflation has kept the euro relatively strong on currency markets, hampering efforts by crisis-hit eurozone states, such as Greece or Spain, to export their way out of trouble.

For his part, Schaeuble, while welcoming the new US minister on his first visit to Berlin, said there is no need for Germany or the US to give "lessons" or "grades" to each other.

"We need to understand each other. The situation in the US is completely different than the one in Europe and I was trying to explain that," he told press.

"I tried to explain to him the complicated structures we have here in Europe. We are on the right way [out of the crisis], but we have complex decision making structures," he added.

Both officials tried to downplay their differences on how to balance austerity with growth-spurring measures.

"I would emphasise the areas where we agree - we share a commitment to growth and to fiscal discipline," Lew said.

According to one German official, the two ministers had a "getting to know each-other-kind-of meeting."

The contact noted that Lew simply set out what the US is doing to stimulate growth and asked what Germany is doing on the same front.

The source said they also discussed the Cyprus bailout, with Schaeuble "explaining more what happened, how we came to this decision rather than looking forward in terms of what comes next."

Lew also showed interest in the EU's so-called banking union - a subject he also raised at meetings in Brussels and Frankfurt, the headquarters of the European Central Bank (ECB), on Monday.

The banking union project envisages making the ECB into a single supervisor of all big eurozone banks, as well as common EU ruleson how to wind down or recapitalise failing lenders.

Germany is currently opposing any model which involves joint risk-taking - in other words, German taxpayers having to pay for failing banks in Spain or Cyprus.

During a press statement on Monday in Brussels after meeting EU council chief Herman Van Rompuy, Lew said he "appreciated the chance to hear about the scope to broaden the framework for oversight and risk sharing in line with euro-area's large and interconnected banking sector."

He also stressed that the US has an "immense stake" in Europe's economic recovery.

Later on Tuesday, Lew was set to fly to Paris to meet his French counterpart Pierre Moscovici, who rescheduled his US meeting amid an ongoing tax evasion scandal surrounding a former minister.


Europe ready to tackle Greek debt relief

The Greek government has built and broadened alliances in EU institutions and member-states that acknowledge the need to restructure the debt and deliver another economic model for the eurozone.

News in Brief

  1. Canada and Wallonia end talks without Ceta deal
  2. Juncker hopes for Canada accord in 'next few days'
  3. Romania drops opposition to Ceta
  4. Difficulties remain on Ceta deal, says Walloon leader
  5. Brexit could lead to 'some civil unrest' in Northern Ireland
  6. ECB holds rates and continues quantitive easing programme
  7. Support for Danish People's Party drops, poll
  8. Spain's highest court overturns Catalan ban on bullfighting

Stakeholders' Highlights

  1. EFADraft Bill for a 2nd Scottish Independence Referendum
  2. UNICEFCalls on European Council to Address Plight of Refugee and Migrant Children
  3. ECTAJoin us on 9-10 November in Brussels and Discover the new EU Digital Landscape
  4. Access NowCan you Hear me now? Verizon’s Opportunity to Stand for Global Users
  5. Belgrade Security ForumMeaningful Dialogue Missing Not Only in the Balkans, but Throughout Europe
  6. EASPDJoin the Trip! 20 Years on the Road. Conference & Photo Exhibition on 19-21 October
  7. EuropecheEU Fishing Sector Celebrates Sustainably Sourced Seafood in EU Parliament
  8. World VisionWomen and Girls Urge EU Leadership to Help end Gender-based Violence
  9. Dialogue PlatformIs Jihadism Blind Spot of Western Intellectuals ? Wednesday 26 October
  10. Belgrade Security ForumGet the Latest News and Updates on the Belgrade Security Forum @BelSecForum
  11. Crowdsourcing Week EuropeMaster Crowdsourcing, Crowdfunding and Innovation! Conference 21 November - 10% Discount Code CSWEU16
  12. EJCEU Parliament's Roadmap for Relations with Iran a Massive Missed Opportunity