Europe must play larger economic role: U.S.

By Sridhar Krishnaswami

WASHINGTON, APRIL 27. Against the backdrop of a global slowdown and a general concern of the trends in the American and Japanese economies, the Bush administration is making the point that Europe must play a larger role in global economic affairs. The United States is expected to make this point at the meeting of the Finance Ministers of the Group of Seven this Saturday.

The Bush administration officials, in arguing that Europe should do ``more'' to counter the global economic slowdown, have been short on specifics. But analysts say Washington would like to see lower interest rates in the European continent. One view is that while the U.S. federal reserve has been quite active in cutting interest rates, Europe has been sitting still since last October on this aspect.

The Republican administration is trying to make the point that the time has come to move away from the thinking that only the U.S. and Japan mattered in coming to grips with world economic growth. ``... that does not mean Europe can be complacent with respect to growth,'' an administration official has remarked. The U.S. is of the view that Europe must take steps to boost productivity and come to grips with high unemployment.

It depends how the Bush administration is going to take up the issue of the economy with the Europeans. As it is, Washington, over the last three months, has been at odds with Europe on a number of issues that would include the National Missile Defence and the Environment. It now remains to be seen if the Republican administration will be pursuing the issue of global economy aggressively with the Europeans.

``I attach great importance to strong and balanced global growth in the context of interdependent U.S., European and Japanese economies. A healthy global economy requires all of us to perform to our full potential,'' the U.S. Treasury Secretary, Mr. Paul O'Neill, said in a statement.

Administration officials have not said what will be discussed at the Saturday meeting which will be a part of the Spring Meetings of the World Bank and the International Monetary Fund. But the general expectation is that there will be an extensive discussion of the state of the American economy, the current slowdown and its implications and the future.

The U.S. Treasury Secretary will be stressing that there were good prospects for faster growth. That apart, Ministers of this powerful group of nations are expected to focus on Japan and on the plans of the new Finance Minister, Mr. Masajuro Shiokawa.

The world's second largest economy has been limping around for quite sometime and the assessment is that Japan needs to get back on its feet for, that is critical for the world and Asia in particular. The Bush administration has also been quite keen on knowing the status of restructuring, especially as it pertained to the Japanese banking system which has been saddled with bad loans.

The Group of Seven is also to take note of what is happening in the developing world, especially the potential trouble spots. For instance, there has been considerable focus on Argentina these days with a fear in some quarters that volatility in that country will lead to a much wider crisis that will not be confined only to Latin America.

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Section  : International
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