WASHINGTON (Reuters) – The United States on Monday urged European leaders to put “more flesh on the bone” for their ideas to tackle the euro zo ne’s de bt crisis as they prepare for a crucial EU summit this week.
In an interview with Reuters, U.S. Treasury Under Secretary Lael Brainard said that while euro-zone leaders were moving with a greater sense of urgency to deal with the crisis, more details were needed on how they would get it done.
She said the upcoming summit of European leaders on Thursday and Friday needed to spell out short-term actions to deal with immediate financial stresses enveloping member states and sketch out a roadmap toward greater economic union.
“We’re all hoping to see them put some flesh on the bones in the days ahead,” Brainard said, referring to commitments European leaders made at a Group of 20 meeting in Mexico a week ago to do whatever it takes to preserve the integrity and stability of the 17-nation euro area.
In particular, Brainard said it was important that the summit spell out how leaders planned to boost market confidence, strengthen banks, ensure that embattled countries Spain and Italy can raise capital at more affordable rates, and boost growth and jobs.
The summit is meant to sketch out a roadmap toward economic union and to send a message to the markets that the continent’s leaders are united and determined to do whatever it takes to restore confidence in the single currency.
Brainard said the United States had consistently supported euro-zone efforts to strengthen its financial firewall to shore up bank balance sheets, but avoided saying how they should do that.
The International Monetary Fund has urged the euro zone to channel aid directly into struggling banks rather than via governments.
“The particulars on how they go forward and how they design their firewall, how they design their policies, those are things that at the end of the day sit with those European leaders,” she said, “We’re all looking forward to seeing some of the specifics.”
Brainard said the United States supported an ambitious plan by Spain to recapitalize its struggling banks with the help of a 100-billion-euro EU loan. Such steps showed that the Spanish authorities were trying to “get out ahead of market expectations,” she added.
But Brainard said it was important that Spain release details on the mechanism by which its European partners planned to inject capital into the banks.
“We would like to see the euro area coming together around a plan as to how they will finance that in a way that really boosts confidence,” she added.
Brainard, who earlier on Monday said Greece‘s economic challenges were manageable if they moved swiftly to tackle their problems, said it was in Athens’ own interest to complete tough economic reforms under an international bailout.
The United States, which is the largest IMF member country, has signaled it will support a review of the timelines of the bailout but not the terms of the rescue program, which includes tough fiscal and structural measures.
“In order to move forward under any circumstance, Greece is really going to have to take those tough structural reforms,” Brainard added.
Talks scheduled for Monday between the new Greek government and “troika” of international lenders, including the IMF, EU and European Central Bank, were postponed at the weekend after Prime Minister Antonis Samaras underwent eye surgery on Saturday and his Finance Minister Vassilis Rapanos resigned.
Samaras’s coalition government, sworn in last week, has called for the renegotiation of the austerity measures of the financial bailout, which is keeping Greece from bankruptcy. (Reporting by Chrystia Freeland, Writing by Lesley Wroughton; Editing by Jan Paschal)