- The Washington Times - Sunday, November 14, 2004

DUBLIN — U.S. Treasury Secretary John W. Snow began a European tour yesterday, aiming to highlight the need for stronger economic growth in Europe as Washington tries to blunt criticism over massive deficits that have pushed the dollar to new lows.

Mr. Snow arrived in Dublin for a weeklong tour and was holding private meetings in the Irish capital, making no public statements ahead of a forum set for today at Dublin City University with officials, students and alumni.

His message, aides said, is to focus on policies promoting stronger growth, arguing that this will ease the imbalances that have prompted jitters over the U.S. currency.

With pressure growing on Washington to trim its trade and budget deficits that sap capital from around the globe, U.S. officials are turning the tables on some of their European critics by talking about weak growth.

The dollar tumbled last week to a record low against the euro amid fears that the United States will have problems financing its deficits.

Although U.S. officials acknowledge the need to reduce the deficits and boost savings, they argue that higher growth is the solution to economic imbalances.

As protests grow louder in Europe over the weak dollar and its impact on other economies, Treasury officials have been cautious in recent weeks in their discussions about currency exchange rates. They have sought to shift the focus to what they see as a more fundamental issue of economic growth.

Mr. Snow told the CNBC television channel Friday that he intends to press the Europeans growth.

“They have to get at the structural barriers that they put in place that restrain the natural potential of their economy. They’ve got to embrace the spirit of enterprise,” he said.

“They’ve got to look at lower tax rates, they’ve got to look at more open labor markets, they’ve got to look at reforming their pension systems. There is an awful lot on the table that they could do. It takes political leadership.”

A Treasury official briefing reporters ahead of Mr. Snow’s trip declined to comment on the level of the dollar — which slumped to a record low of $1.30 against the euro last week — but said Washington is doing its part to address the economic imbalances.

“One of the reasons to have faster growth in countries which are not growing is to address imbalances,” said the official, who asked not to be identified.

“If you get more rapid growth in Germany or in other countries not growing as rapidly as they should, that will be beneficial to our exports and help with the reduction in the trade deficit.”

Europeans have been critical of U.S. policies leading to a massive current account deficit — the broadest measure of trade and investment flows — which widened to a record $166.2 billion in the second quarter.

The gap has weighed on the dollar. Economists fear that if foreign governments and investors turn away from the United States, it could cause a precipitous drop in the greenback that would send shock waves through the global economy.

The U.S. official said Washington is doing its part to encourage savings and to address the budget deficit — a record $413 billion in the most recent fiscal year — and argued that other countries should do more, as well.

From Dublin, Mr. Snow will travel to London for talks with British officials and a speech tomorrow at Chatham House in London aimed at explaining the U.S. economic recovery.

Mr. Snow then will fly to Warsaw for a round-table meeting with the finance ministers of the Czech Republic, Hungary, Poland and Slovakia, new members of the European Union.

The final stop of his trip will be Berlin, for a meeting Friday through Sunday of the Group of 20 largest industrial powers.

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