As a European, and a supporter of the European project of democratic collaboration and solidarity among peoples, I find it more than a little humiliating that European heads of government have made such a mess of the financial and economic crisis, that it is now the Americans who are entering the game and exerting pressure against the obvious danger of collapse.
The American secretary of the Treasury, Jack Lew, has now pointed out what is obvious to everyone: that Greece will never be able to pay its debt, and needs some form of relief.
The American President has gotten involved, calling the German chancellor, to try and avoid further collapse, and note that Greece needs reforms and growth. This is not the first time Mr Obama points out the obvious. He had previously said:
you cannot keep on squeezing countries that are in the midst of depression. At some point there has to be a growth strategy in order for them to pay off their debts and eliminate their deficits. […] when you have an economy that is in a free fall there has to be a growth strategy and not simply an effort to squeeze more and more out of population that is hurting worse and worse.
Larry Summers (former US Secretary of the Treasury) points out in the Financial Times:
Financial historians may look back at the events of next week and wonder how Europe’s financial unravelling was permitted.
They will wonder indeed. In their account, I have no doubt, will feature the observation that European heads of government lacked the strategic depth and vision that the Americans, as a global superpower, still have. It’s no coincidence that the Americans are the ones pointing out that Greece is a member of the European Union, a member of NATO, and it’s severing from Europe is major security risk.
What credibility does the European Union have with such a spectacle unfolding? Not even European Institutions are cohesive. The recent behavior of the Eurogroup may be a sign of things to come: this group of Finance Ministers of the Eurozone, has decided to issue a statement without unanimity, and to have a meeting excluding one of its members (the greek finance minister). Any nation with a sense of honor and credibility would not take this humiliation lightly.
European citizens are already paying the long term costs of the egregious mismanagement the heads of government have inflicted on the EU. We have to hope that Larry Summers’ warning over financial unravelling does not turn into a political unraveling. The consequences then would be unpredictable.