U.S. Treasury Secretary Timothy Geithner on Tuesday said that Europe has the ability to avoid a worsening crisis and urged EU member countries to speak with one voice when telegraphing plans to solve their debt problems.
"The simple rule in crisis management is, you want to have a simple, clear, unified declarative strategy. That would be helpful," Geithner said at an event sponsored by the Wall Street Journal.European Union leaders are racing to resolve the Greek sovereign debt crisis and have been pressuring Athens to press ahead with more austerity measures.
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European finance ministers have given the country two weeks to approve further spending cuts and tax rises in exchange for another 12 billion euros in emergency loans to help Greece avoid defaulting on its debt.
Geithner said the United States is actively involved in helping Europe get a plan together and said that European leaders had to find a solution that works for the politics of Europe.
The specter of further austerity measures in Greece has fueled mass protests and demonstrations. Geithner said ambitious fiscal reform plans will take years not months and will not work unless there was a broad financial backstop behind them.
When asked if European bond holders should be forced to take a "haircut," or a loss on their investment, Geithner said there was "no easy answer."
Geithner is facing his own set of fiscal problems in the United States as the Obama administration tries to reach a deal with Congress to allow the U.S. Treasury to borrow more funds.
Geithner has warned that the United States will begin defaulting on its obligations, whether payments on debt or other bills, if Congress does not raise the nation's $14.3 trillion debt ceiling by Aug. 2.
"We're going to avoid a default crisis, no doubt about that,' Geithner said.