US Treasury: Europe must restructure Greek debt

The United States says Greece's European Union creditors must restructure the country’s debt to provide it a path for debt sustainability and growth, and to keep the country in the eurozone.

“Greece’s debt is not sustainable,” US Treasury Secretary Jacob Lew said on Wednesday, as Greece faces a deadline on Sunday for a new bailout deal with European lenders.

“In the next few days what we’ll see is, can the parties come together to build enough trust that Greece will take the actions that it needs to take so that Europe will restructure the debt in a way that is more sustainable,” he said while speaking at the Brookings Institution think tank in Washington, DC.

Lew agreed with the International Monetary Fund's analysis that the crisis-hit country cannot pay its debts.

"I think the IMF has been very correct in focusing on debt sustainability," he said.

Greece requested for a three-year loan from the European Stability Mechanism bailout fund that would be used "to meet Greece's debt obligations and to ensure stability of the financial system."

On Tuesday, eurozone leaders set Greece the Sunday deadline to come up with far-reaching reform proposals.

"I don't think any PM of Greece could sell all of the additional fiscal measures plus the structural reforms that are needed without some sense of what the debt sustainability looks like," Lew added.

Lew said Greece needs to make commitment about reforms, but the Europe must restructure its loans to go ahead.

"The reluctance to restructure European debt is deep on the part of many European players," Lew said.

On Tuesday, US President Barack discussed Greece’s debt crisis with German Chancellor Angela Merkel on phone, according to the White House.

"We continue to encourage all sides to participate constructively in those conversations," White House spokesman Josh Earnest said.

Earlier in the day, Obama spoke to Greek Prime Minister Alexis Tsipras by telephone just before an emergency eurozone summit in Brussels.

Tsipras briefed Obama on Greece's request for a loan to save its economy, according to a Greek government official.

The official said the US president had expressed hopes for a successful On Wednesday, Tsipras spoke to the European Parliament, calling for a fair deal to keep his country in the eurozone.

"We are determined not to have a clash with Europe but to tackle head on the establishment in our own country and to change the mindset which will take us and the euro zone down," he said to applause from the left.

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