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US pushes growth agenda in Greece

US Treasury Secretary Jacob Lew praised Greece's reform efforts during his recent visit. He also advocated closer cooperation between the US and Europe.

Just a few days after German Finance Minister Wolfgang Schäuble's visit to Athens, his American counterpart, Jacob Lew, touched down in the Greek capital. He applauded Greece for its progress on economic reforms while subtly pointing out that there was still a lot to be done.

"We know you're working hard to set Greece on a path of sustainable growth and prosperity," he said during talks with Greek Prime Minister Antonis Samaras. He added that after all that Greece had achieved "I know you don't want to leave this work unfinished."

Focus on growth and jobs

Much to the delight of his Greek hosts, Lew was keen to talk about growth and closer cooperation between the US and Europe.

Greece has been hoping for some time that the US would put more pressure on the EU to change its strict focus on cuts and a balanced budget to a strategy more geared towards encouraging growth.

"The Germans may well have the upper hand in the euro area, but the US is still the biggest economic power in the world, and they have the biggest say in the International Monetary Fund [IMF]," says political analyst Dimitris Tsiodras, who is based in Athens.

Tsiodras points out that the IMF has its own agenda on Greece and has often applied pressure on Europe to tone down its strict budget-oriented policies there. He believes the IMF will continue to follow this path, even against German opposition.

German Finance Minister Wolfgang Schaeuble (R) meets Greek Prime Minister Antonis Samaras in Athens July 18, 2013. . REUTERS/John Kolesidis (GREECE - Tags: POLITICS BUSINESS)

Schäuble is a stickler for budget discipline

During his visit to Athens last week, Schäuble insisted Germany would not support another haircut for crisis-ridden Greece. He did say Germany was prepared to think about some concessions to Greece's debt repayments from 2014- but only if the Greek government can achieve a primary budget surplus, i.e. the surplus that excludes interest payments on its current debt.

Growth vs. austerity

Media in Athens still like to refer to a news conference with Schäuble and Lew in Berlin in April. Back then, Lew explicitly called for "policies to help to encourage consumer demand in countries that have the capacity." Schäuble shot back that it wouldn't help at all to "openly censor or give advice."

Lew's predecessor Timothy Geithner had also repeatedly criticized European countries for what the US sees as neglect of domestic demand. But even if Lew is successful, reforms are absolutely essential for Greece, says Tsiodras.

Lew and Schäuble do agree that "reforms in southern Europe are long overdue," he says, but Schäuble insists that reforms have to go hand in hand with budget cuts, whereas the Americans are more focused on pushing growth.

A woman holds a Greek and a black flag as she stands in front of the parliament during an anti-austerity protest in Athens July 17, 2013. Prime Minister Antonis Samaras announced Greece's first major tax cut since its crisis began nearly four years ago, highlighting a hard-won concession just hours before lawmakers vote on a bill to eliminate thousands of public sector jobs. REUTERS/Yannis Behrakis (GREECE - Tags: POLITICS BUSINESS CIVIL UNREST EMPLOYMENT)

Greeks continue to demonstrate against austerity measures

It is not so much about giving away money to southern Europe, according to Tsiodras, but rather it is about strengthening demand in northern Europe as well as implementing a restructuring program in southern Europe to encourage economic growth.

The fact that Athens relies on US support on this important issue became apparent when Finance Minister Yannis Stournaras said in an interview with To Vima, a Greek Sunday paper, that he hoped for a constructive discussion with the US Treasury Secretary so that the US would support the Greek position "if that is indeed necessary."

More US-Greek talks

Greek commentators point out that the US is not primarily interested in the Greek economy, but in the stability of the entire eurozone.

"Working with Europe remains at the top of my agenda because American jobs and growth are inextricably linked," Lew emphasized when he was in Athens. He added that growth and wealth in Europe and Asia were of particular importance for the global economy.

There are more talks scheduled between Washington and Athens. On August 8, Samaras is to meet US President Barack Obama in the White House. According to Greek TV channel Alpha, Lew has asked Athens to come up with a list of projects that are worth investing in for US companies.

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