U.S. Treasury Secretary Jacob J. Lew said that a possible Greek exit from the euro would have a major impact on the country’s citizens and economy and that risks of potential consequences for other nations remains unclear.
European Union leaders and Greece’s creditors are making last-ditch efforts to avert a Greek exit from the joint euro-zone currency and unlock aid for the nation at risk of default.
“Within Greece, the consequence of a failure here would mean a terrible, terrible decline in their economic performance,” Lew said in an interview on “CNN’s Fareed Zakaria GPS” that will air Sunday. “They will bear the first brunt of a failure.”
The clock is running down on a June 30 deadline for Greece to make payments of about 1.5 billion euros ($1.7 billion) owed to the International Monetary Fund and work out a new deal amid disagreements on pensions, sales tax and a deficit target.
With its finances in tatters, it’s unclear how long Greece can hold out against the conditions attached to a fresh infusion of rescue loans.
While all parties in the negotiations must be flexible, “the burden is on Greece,” Lew said, according to a copy of the transcript of the interview provided Saturday. “The best solution is for Greece to make some tough decisions.”
It’s unclear how international markets would react if a deal can’t be reached and Greece were to withdraw from the euro, Lew said.
“The reality is we see from day to day that there are impacts on other markets,” Lew said. “I don’t think anyone should want to find out.”
The interview also covered topics such as the proposed redesign of the $10 bill to include an as-yet-unnamed woman, the Trans-Pacific Partnership agreement and meetings this week with Chinese officials.
Lew and Secretary of State John Kerry will meet their Chinese counterparts in Washington this week for the seventh Strategic and Economic Dialogue between the countries.
Cybersecurity is likely to be on the agenda. U.S. officials are weighing how to respond to a massive hacking attack they say originated in China and breached U.S. Office of Personnel Management computers, stealing millions of records of current and former federal employees.
As the world’s two largest economies the U.S. and China should work together on cybersecurity, Lew said.
“We need to use the S&ED as a place to raise both the issues where we can work together and the issues that are of conflict between us,” Lew said. “But we’ve also been clear that China does things that we don’t do. And, you know, in the past, we’ve been very clear at confronting them on issues about the theft of intellectual property and trade secrets.”