Little more than a gentlemen’s club in recent years, G7 finance ministers and central bankers have their work cut out this week to revive stuttering global growth and defuse tensions over China’s growing economic clout.
Topping the agenda for the finance chiefs from the Group of Seven industrial nations is how to keep a faltering global recovery on track as the threat of a Greek default, rising oil prices and bond market turmoil fuel investor nervousness.
The United States is likely to use the talks, beginning late on Wednesday and running through to Friday, to press Europe to reach a funding-for-reforms deal with Greece.
U.S. Treasury Secretary Jack Lew said he feared a miscalculation could lead to a new crisis which could have consequences for the wider world and said Greece’s creditors may have to give some ground if its leaders took “the kinds of tough steps that they need to take”.
“The challenge for the Europeans, the political and economic institutions — the IMF — is to show enough flexibility,” Lew said at the London School of Economics, prior to flying to Dresden.
That message has already been delivered in private.
“The Americans are stressing the geopolitical risks and telling us we have to find a solution, that we cannot really put the euro area and Europe at risk because of Greece,” one official close to the discussions said.