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The Obama administration has leapt to the defence of Greece, warning Germany and Europe’s creditor powers that they must meet Athens halfway to avert a potentially dangerous rupture and a euro break-up.
Caroline Atkinson, the US deputy-national security adviser, said the eurozone authorities had imposed the burden of adjustment on the weaker deficit states and should do more to accept their share of responsibility for the crisis. “They have asymmetric rules. They need to make it socially fairer,” she said.
“It is important for creditors to take into account that Greece has had a very sharp drop in incomes, real wages, and output as well as a big rise in unemployment,” she told a gathering at Chatham House in London. “Greece has moved into primary surplus. How much more fiscal consolidation is necessary?”
The comment will be music to the ears of Greek finance minister Yanis Varoufakis, who wants a cut in the EU-IMF troika target for the primary surplus to 1.5pc of GDP from 3pc this year and 4.5pc next year.
Mrs Atkinson said the White House was relieved that “both sides” were starting to pull back from the brink, a clear warning that Washington is as exasperated with the high-handed approach of eurozone leaders as it is with the Leftist Syriza government in Athens.
“We believe it is strongly in the interests of the Greek people and Europe more generally that Greece and its creditors work out a compromise for Greece to stay in the euro and thrive in the euro,” she said.
The two sides have toned down the rhetoric slightly and agreed to start technical talks but they are in different cognitive universes on the core dispute over austerity and debt relief. The US administration does not share the widespread view in Europe that there is little risk of contagion if the European Central Bank cuts off liquidity support for the Greek banking system and forces the country out of the euro. President Barack Obama has seized on the Greek crisis to push for a broader reflation strategy in Europe.
“You cannot keep on squeezing countries that are in the midst of depression.
“At some point there has to be a growth strategy in order for them to pay off their debts,” he said earlier this month.
Washington is increasingly disturbed by the successive downgrades to global growth forecasts over recent months, fearing that the world’s fragile recovery may stall if Europe and Asia continue to rely on the US to carry the international system.
“A key part of that weakness is tepid growth in the eurozone,” said Mrs Atkinson. She praised the success of Germany’s export machine but said the country must do more to boost global demand and limit its current account surplus, running at more than 7pc of GDP and a bigger problem for the US than trade flows from either Japan or China. (© Daily Telegraph, London)