Euro, Trashed
What the Greek crisis means for US security
GREEK voters have decisively rejected the European Union’s last offer to help resolve their financial crisis. But lost in the latest chapter of the EU Greek saga is the fact that the fallout threatens America’s strategic interests in Europe — and Russia and China are poised to gain at our expense.
Many, believing they voted against “austerity” in Sunday’s referendum on the EU’s proposed bailout of Greek debt, nonetheless want to remain in the Eurozone. By contrast, EU officials had declared these objectives mutually exclusive, threatening repeatedly that voting “no” amounted to Greece abandoning the euro and heading back to the local currency.
We’ll see. The unexpectedly large “no” vote ( over 60 percent) signifies that dramatic steps will now be required to prevent a “Grexit” from the Eurozone. And while the United States has largely been silent publicly, the time to state our interests clearly is now at hand.
Whatever Eurozone authorities do financially to Greece or Greece does to them, Washington has an overarching security interest in not seeing NATO damaged in the process.
The next decision is with the European Central Bank. Greece’s underlying economic conditions have considerably worsened since the referendum was announced. Greece may well deploy scrip or IOU’s as an interim measure, but also thereby paving the way for reinstituting a separate Greek currency.
While ditching the euro would be traumatic in the short term, so too would be the effects of the creditors’ austerity program.
This is the euro’s inherent flaw: nationstates decide fiscal policy, while Brussels sets monetary policy. And it’s precisely this inherent flaw that the West’s international adversaries could seek to exploit.
Greece’s importance today is far more than just financial. Indeed, the longrange ramification of the euro crisis, which the EU’s theologians still don’t comprehend, is almost certainly more significant.
Beyond the EU and the Eurozone, there are even more profound considerations.
Geostrategically, it’s critical to keep Greece firmly tied to Western security structures like NATO, regardless of what currency Greeks choose. Younger Greeks, disillusioned by five years of haughty behavior from Brussels, overwhelmingly voted “no,” while older Greeks, who are dependent on pensions, largely voted “yes.”
That generation gap is dangerous not just for the EU, but for the West itself. Here’s where America’s interests are particularly high. We should make it clear that, while Europe collectively may have made a mess of things for the Greeks, the United States will not tolerate meddling from foreign powers tempted to fish in troubled Western waters.
This most certainly does not mean concessional loans from Washington, but it does mean active political involvement, including by President Obama, to warn away potential troublemakers.
Russia and China rank high on this list. Given the recent EU decision to extend economic sanctions against Moscow for intervening militarily in Ukraine and annexing Crimea, Vladimir Putin is eager to strike back.
The reemergence of Russia as a power player in Central and Eastern Europe would carry palpable political symbolism and risk.
Chinese efforts to make itself Greece’s banker might also be forthcoming, not because the economics are so attractive, but precisely because deepening involvement beyond Asia would demonstrate China’s increasing emergence as a truly global power.
Despite its own economic difficulties, China’s huge foreigncurrency reserves give it enormous potential leverage over countries needing a financial lifeline. Its new Asian Infrastructure Investment Bank already potentially challenges the World Bank, and creating an alternative to the IMF is the next logical step.
Greece could prove to be an interesting test case.
In the days of the Moscow Beijing Communist rivalry, China was not afraid to be a provocateur in the Warsaw Pact.
Now once again more closely aligned, Beijing and Moscow aspire, as Putin said in May, “to reach a new level of partnership that will create a common economic space across the entire Eurasian continent.” Under current management in Washington, China likely sees no risk today in pursuing such an aggressive agenda.
For too long, the US foreign policy establishment has adhered to the EU theology of an “ever closer union.”
That reflexive approach was never in America’s interest, and its failures and risks are evident today.
This is most certainly not the time to leave things to the Europeans.