Obama: Greece needs to make “tough decisions”

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From Yesterday’s FINANCIAL TIMES World News:

US President Barack Obama said Greece needs to make some “tough decisions,” as he warned that the eurozone shouldn’t rely on America to drive the global economy.

With the Greek government potentially running out of money as soon as next month, the question of whether Athens can persuade its creditors to dispatch more money from its bailout fund has dominated financial markets this week.

Mr Obama, who was hosting Italian prime minister Mario Renzi in Washington, told a press conference:

Greece needs to initiate reforms; they need to collect taxes; they need to reduce their bureaucracy.

When the new PM (Alexis Tsipras) came in, I called him and recognised you need to show your people that there’s hope, that you can grow, but you have to show those who are extending credit, who are supporting your financial system that you’re trying to help yourself; that requires making the tough decisions.

Negotiations between Greece, the International Monetary Fund and other eurozone countries have so far stumbled on which set of reforms the new government in Athens is prepared to sign up to.

Europe’s monetary authority unleashed a new wave of stimulus in March, which has buoyed stock markets and raised hopes that the eurozone might break free of its economic stagnation.

However, Mr Obama added:

All of us have to recognise that global aggregrate demand is very weak; China won’t be growing as fast.

What I’ve said to the Europeans is don’t expect that the US will be the engine for everyone; don’t expect you can keep selling to the US but we can’t sell anything to you because your economy is weak.

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