The long running Greek crisis appears to be heading toward some kind of major turning point, and I don’t mean that in a good way. As the money runs low and both sides dig in, the Greek central bank that the real losers will be ordinary Greeks, whose living standards, already under pressure, are likely to fall even further as the country scrambles to survive a rupture in relations with creditors and international financial institutions.
But this is more than a Balkan brouhaha. The failure of the Greeks and their euro-creditors to manage the debt crisis in a civilized and orderly way is a significant setback for the West, and for the interests of, among others, the United States. The European Union is the world’s most successful law-based, international organization; it is also America’s greatest foreign policy success. Petty bickering and wrangling across the Atlantic should never be permitted to obscure the reality that the European Union is America’s love-letter to the world. If people in Malaysia, Peru, Nigeria or Egypt want to understand what the American project for the world is leading to, they should look at the peaceful, democratic and prosperous European Union. Even in the depths of World War Two American policymakers were thinking about how we could help promote the emergence of a new kind of Europe after the war. After the war, the Americans promoted the European economic integration that became the basis of the EU, and we provided a security framework and an international economic system that helped Europe recover from the war and build a new kind of international cooperation.
Over the generations since that time, the Atlantic partnership has remained an emblem of hope and an engine of prosperity for the world. If the twenty first century goes well, the model of the EU — an international organization based on democratic and liberal ideas that protects the rights of individual states while working for their common good — will have more and more impact on the world. Regional associations in Africa, Latin America, South East Asia and the Middle East will offer more people worldwide the freedom and prosperity that Europeans now share. Promoting this kind of international system has been the chief goal of American foreign policy for more than 100 years, and it is hard to see any other potential American agenda that would be as good for American security and prosperity — and would be more welcome or more successful abroad. The prestige and the drawing power of the EU is one of the most important elements of the soft power that makes the American ideal of a rules-based, peaceful and commercial international order globally attractive, and trouble for the European Union means trouble for the American world project as well.
Against that background, the weaknesses in Europe’s policymaking that the Greek crisis places in such a harsh spotlight are grounds for deep concern in the United States. Poverty in Africa, and mounting instability in the Middle East is creating a major migration crisis to Europe’s south. The wars in Syria and the rise of ISIS (and evidence of a jihadi Fifth Column inside Europe itself) present a new kind of security threat which requires new thinking about European defense. An aggressive Russia is pressing on Europe’s weak eastern flank. Unless the EU gets its groove back, a divided, inward-looking EU is not going to be very effective dealing with the growing threats to its east and south, and the already difficult challenges facing American foreign policy will become significantly harder to manage.
Since the end of the Cold War, European and American foreign policy has had a mixed record. Both can take some credit for the extension of western security and, increasingly, prosperity into much of eastern and central Europe. More, the World Trade Organization and, with all its flaws, the financial liberalization and globalization of recent decades have made the last 25 years among the most successful years in world history when it comes to raising living standards and fighting hunger and disease around the world. Values that matter to the public in the Atlantic world, including the protection of the environment and the rights of women and sexual minorities have become global causes and much progress has been made.
Nevertheless, it is hard to argue that the Atlantic world and its global partners have been successful when it comes to securing the stability of the emerging world order. Mounting tensions in East Asia, the shadow of Russia across Europe’s east and the horrific slaughters and meltdown in the Middle East pose serious and growing challenges to the safety and prosperity as well as to the values of the democratic world. Worse, as the Greek crisis demonstrates, the European Union itself is failing to manage its internal challenges effectively. At a time when an increasingly turbulent world most needs a stable and prosperous European Union both as an inspiring example and as a force for constructive action in international affairs, the European Union is becoming steadily less inspiring and capable as the euro crisis and its political and social consequences focus Europe’s energies within.
Things have reached this unhappy point because all of the principal actors in this crisis—Berlin, Paris, Brussels, Athens, Washington—have miserably failed basic tests of statesmanship. Paris and Berlin, with enormous selfishness and greed, have essentially refused to admit that their lax and shortsighted bank regulators and deeply stupid financial establishments made tens of billions of euros worth of completely baseless and foolish loans to Greece and other Club Med countries during the Great Euro Bubble. The introduction of the euro meant that interest rates fell in the traditionally high inflation, high interest southern countries, and bankers with no real sense of the environment made loans that could never and will never be repaid.
Instead of facing this honestly and sharing the pain, the rich European governments decided to let their banks off the hook and throw all the costs onto the Greeks. This was a terrible betrayal of the European ideal, and the damage that has resulted (and not only in Greece) will reverberate for years to come. In a just world, the losses would be divided between creditor and debtor alike — and the IMF has made this point more than once. The citizens of debtor countries are being squeezed too hard, and the rich countries aren’t facing up to their co-responsibility for the disaster.
A smarter and more serious Europe would not have introduced the euro so cavalierly, and it would have done much more to control the resulting Club Med and Irish bubbles before they grew to such a dangerous size. Given where we are today, in a more serious Europe German and French and other northern taxpayers would be funding large bank bailouts, and the southerners would benefit from conditional debt relief as they made progress on reform. But the north’s powerful politicians didn’t want that to happen; Germans and others would be enraged to discover that their taxes were going up to pay for the mistakes of their politicians and their bankers. So the northern politicians chose to throw all the blame on the PIIGS, refuse the haircuts that their foolish bankers so deeply deserved, and as a result they polarized European politics and poisoned public opinion in both the northern and the southern countries. History will not look kindly on the incompetent opportunists who introduced the euro without really understanding the risks and responsibilities a common currency would entail and the irresponsible authorities who chose to immiserate southern Europe and unleash a wave of bitterness that fundamentally weakens this great and hopeful project.
But let’s not forget the Greeks. They lied their way into the currency union with deliberately cooked books. They behaved with unparalleled greed and stupidity by accepting loans they knew they could never repay. A wretchedly corrupt and short sighted political class and foolish, greedy voters failed to make the changes and reforms during the good years that could have prepared the country for tougher times. Then when the deluge came, the Greeks continued to dodge and twist. They have bungled the reforms they attempted, one result being that they have endured all the suffering of austerity while reaping far fewer benefits than competent administration and a serious commitment to reform would have brought them. And now to cap it all off, at this critical hour for the country they have elected a group of incompetent, inexperienced clowns whose antics and posturing have alienated potential allies and left Greece the most isolated and disliked country in Europe. It is a pathetic performance all round.
As for Washington, the Obama administration has spent most of its time and dissipated its political and intellectual energy chasing unicorns—remember the reset with Russia, the once-ballyhooed G-20 forum, and the ‘transition to democracy’ in Egypt?—at a time when the European Union, the foundation of America’s alliance system and our greatest single partner for trade and investment, was sinking into crisis. The United States has been AWOL as the EU lost its way. The Obama administration failed to understand just how important Europe is to the United States, and it has never appreciated how important the United States is to Europe.
An intellectually engaged, politically committed Washington might have been able to help the Europeans out of their impasse; that has in many ways been the American role in Europe since the 1920s Dawes and Young Plans. When we commit and engage, things often go well in Europe. When we walk away and close our eyes, they rarely do. This would not have involved wars, drones, troops or huge foreign aid plans. It’s the kind of international project that Democrats could have sold to the base. It would have only required the kind of ‘smart diplomacy’ that the Obama team claimed it was bringing to the table. But unicorn-chasing is more glamorous than attending to the foundations of liberal world order. Washington has criticized everyone and helped no one in the euro crisis; not since the 1930s has America been this absent when its vital interests were this critically engaged.
The Obama administration wasn’t alone in neglecting Europe. Many people—and I don’t exempt myself!—developed a view in the first decade of this century that Europe was no longer a priority for American diplomacy. Many Europeans at the time interpreted this as American disdain for ‘Old Europe’; actually, it was more over-optimism than contempt that was at work. Americans tended to assume that Europe was going to solve all of its problems on its own, and failed to remember that one of the key ingredients of European stability is an active American presence. It’s an old pattern: America engages, things settle down; America turns away, and things begin to go pear-shaped.
This isn’t because Americans are smarter or better than the Europeans; it has something to do with the natural imbalances in Europe. Germany is both too big and too small for European stability. Many people thought that German unification meant that Europe needed America less after the Cold War. Arguably, German unity means that Europe needs America more. We need to be in the mix, not as a rival to Germany or trying to thwart it in some kind of 19th century balance of power game. Far from thwarting Germany, the American presence in Europe since 1945 greatly assisted Germany’s recover and reintegration into Europe, and promoted and helped secure the foundation of Franco-German cooperation on which everything else in Europe rested for many years. The next American presidential administration is going to have to take Europe seriously again. Bilateral relations with all the leading European countries need to be deepened, and the United States also needs to think much more intensively about the nature of Europe’s difficulties and the things we can do that would promote the health of the Atlantic partnership in a dangerous world.
The world doesn’t work well when Europe is a mess, and Europe doesn’t work well when America is absent. Those are the two most important lessons of the tragic twentieth century; we forget them at our peril.