Euro Crisis Has Washington on Edge (6/19)     Print Email

By Michael Mosettig, Former Foreign Editor, PBS News Hour

Washington policy wonks are so worried about the euro that a luncheon speech from German Vice Chancellor and Economics and Technology Minister Philipp Röesler packed a hotel ballroom. Sponsors of the event, the Friedrich Naumann Foundation, said they haven't pulled in this kind of crowd in two decades.

 

Coming on the heels of the second Greek parliamentary election, Röesler's speech reflected the collective sigh of relief heard from the G20 Summit at Los Cabos, Mexico, to markets in Asia, Europe and the U.S.

But from the minister, who gave his prepared speech in English and handled questions after in German, the response to the defeat of an anti-bailout leftist party was clearly measured, as if anticipating tough bargaining ahead with whatever coalition comes together in Athens.

"Only if Greece has a functioning government, can we continue on the path of consolidation," Röesler said, adding, "we expect the Greek government to implement the promised reforms."

The minister did try to demonstrate some flexibility, asserting that budget trimming was not an end in itself and consolidation and growth go together. But when asked why easier terms were not on offer for Ireland, which has complied with EU austerity demands, he said that structural reforms have to be in place in countries receiving bailouts before more money emerges.

Without specifying either his French partners or his U.S. counterparts one block west in the Treasury Department and White House, Röesler asserted that growth fueled by borrowing will not work in the long term.

The Free Democrat party leader gave an upbeat answer to the final question about the FDP's political prospects as their poll numbers have dramatically shrunk since the 2009 elections. He suggested the party has hit bottom, that the polls are moving back and that Germans are once again listening to their arguments.