Obama urges eurozone leaders to act on crisis

The eurozone’s leaders need to show markets they are taking responsibility for its debt crisis and work out how to tally monetary union with budget policy, Spanish press reported United States President Barack Obama as saying.

Greece is the immediate concern, but an even bigger problem is what may happen should markets take another run at the larger economies of Spain and Italy, the EFE news agency reported Obama as telling a roundtable with Spanish-speaking journalists in Washington.

“It is difficult to coordinate and agree a common path when you have so many countries with different policies and economic situations,” Obama said, according to the report on the El Mundo newspaper website.

“In the end the big countries in Europe, the leaders in Europe must meet and take a decision on how to coordinate monetary integration with more effective coordinated fiscal policy,” the EFE Spanish-language report quoted Obama as saying.

US Treasury Secretary Timothy Geithner is due to make an unprecedented one-day trip to Poland this week to meet with eurozone finance ministers as fears grow that Greece will soon default on its debt.

Weakness in the global economy will continue so long as the eurozone crisis is not resolved, Obama said.

Biggest concern
Greece is “the biggest immediate concern”, the report quoted Obama as saying, but the biggest problem will be “what will happen in Spain and Italy if the markets keep attacking these very big countries.”

A long-term solution is possible if markets believe eurozone countries with budget surpluses are willing to back their partners in the monetary union, he said.

The US is deeply involved in consultations with the eurozone over how to resolve the crisis, Obama said.

The eurozone debt crisis will be one of the major issues on the table at the G20 meeting in France in November, he added.

Meanwhile, Greece’s finance minister is to speak with his German counterpart and meet the head of a European Commission task force for the debt-ridden country as the government struggles to contain a crippling financial crisis roiling global markets.

Evangelos Venizelos was to speak on Tuesday with Wolfgang Schaeuble after holding a lengthy telephone conversation the previous day.

Senior German politicians have suggested publicly in recent days that an orderly bankruptcy of Greece may be part of a solution to the country’s problems.

Fears Greece will default on its debts and signs of division among European policymakers on how to manage the crisis sent Greece’s borrowing costs skyrocketing to new record highs of nearly 23% on Monday. — Reuters, Sapa-AP

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