Geithner sees G20 support, wants less tension

By David Lawder

SEOUL (BestGrowthStock) – U.S. Treasury Secretary Timothy Geithner arrived in Seoul on Thursday intent on cooling tensions among Group of 20 officials and said he was optimistic that heads of state could reach a deal to curb unsustainable trade imbalances.

Geithner, speaking to reporters on his plane to the G20 leaders summit here, said a heightened level of rhetoric and public squabbling masked a basic consensus in the group that excessive trade imbalances should be limited and competitive currency devaluations should be avoided.

“We are optimistic leaders will broadly support a cooperative framework for stronger global growth. There is a lot of promise in it, particularly the emphasis on external sustainability. Indicative guidelines will act as an important early warning system so we can see risks ahead and be able to avoid another financial crisis like we’ve just been through.”

Finance officials from Germany to China in recent weeks have unleashed criticism of the U.S. plan to set guidelines to determine when current account surpluses and deficits are unsustainable and have flatly opposed numerical targets based on percentages of gross domestic product.

They also have slammed the U.S. Federal Reserve’s latest $600 billion round of monetary easing as weakening the dollar and stoking capital inflows and inflation in emerging markets.

G20 deputies in Seoul sparred in a tense negotiating session on Wednesday but reportedly remained far apart on currency language. A G20 spokesman said the door to the negotiating room had to be opened because “the debate was so animated and the room was getting hot.”

Geithner said such rhetoric was overblown and noted that G20 member states still essentially support the basic agreements hammered out at a finance ministers meeting last month in Gyeongju, South Korea.

“I think it overstates the level of disagreement about the challenges we have ahead,” he said. “And we expect we’ll see broad support for the type of cooperative framework that the ministers of finance first introduced two weeks ago. And we think everyone should have an interest in lowering the temperature and diffusing some of the tension and agreeing on a multilateral process for helping resolve these pressures with less risk of financial market stress and political pressure.”

Geithner has said repeatedly during a week-long trip to Asia that the United States is not pressing for numerical targets for current account imbalances. Instead, it wants the G20 to develop some other mechanism, in consultation with the IMF, that can determine when imbalances are too big. A final statement from the G20 leaders in Seoul will not include any numerical targets, a G20 official involved in the negotiations told Reuters on Wednesday.

(Reporting by David Lawder; Editing by Andrea Ricci)

Geithner sees G20 support, wants less tension