Will Europe Rise to the Occasion?
How successfully is Europe coping with its unprecedented fiscal challenges?
- The Europeans are dealing with issues that have never been dealt with: cross-border budgeting, fiscal union, eurobonds, bailouts.
- Americans can be confident and take some inspiration from the European experience to do the hard thing when it's necessary, rather than blaming each other.
- Europeans have ultimately always done the right thing after all other opportunities were wasted.
Jeffrey Brown, PBS correspondent: Stephan, how important do you think the German vote was, and why?
Stephan Richter, publisher and editor-in-chief of The Globalist: I think it was very important.
It was, in American baseball terms, getting to first base or maybe second base. There’s a long road to go. It was a necessary step, not a sufficient one. There’s a whole lot of other things that need to happen. But there was a vital and vibrant and vociferous public debate. And I think that’s very necessary, because what we tend to forget is, this is about the power of the purse, the essence of what made democracy, the power of parliaments against kings.
And now the money of the people is being pushed around Europe. I think it’s very necessary, but in a democracy, we need to have a big debate about that. And it’s going to be painful.
Jeffrey Brown: And even as that debate was going on in preparation for this vote, many people were saying, well, this isn’t enough anyway, right? Do you sense any growing understanding that more will be needed?
Stephan Richter: I think everybody knows it. We’re going through some motions, as I said, first base, second base. Then there was already talk at the World Bank/IMF annual meeting about replenishing the fund, about doing more to make sure that banks don’t do this stuff again, because there was no cross-border supervision and things like that.
The key is really to lay the foundation, to get Europe right. They got it wrong when they had the Maastricht Treaty, when they tried to do some of these things about fiscal probity and so on. They screwed up. They had it on paper, but they never put it into reality.
And there’s one thing that I think most Europeans are now united in, which is not to do that same thing again, because it’s very costly if you don’t take the right measures at the right time.
Jeffrey Brown: And what do you make of the public attitudes now, particularly the pressure on the politicians?
Stephan Richter: The pressure — well, that’s what they’re there for, right? It’s not just coasting and just cashing your paycheck. They have to take painful decisions.
And I think, ultimately, they’re doing a good job, especially if you compare it to what’s going on in the United States with the debt ceiling and so on. Those things being debated in Europe are monumental. They’re terra nova. It hasn’t been seen before.
So, it takes courage. It’s painful. People will resent it, but Europeans have ultimately always done the right thing after all other opportunities were wasted.
Jeffrey Brown: What about on this side of the Atlantic? President Obama recently said Europe has to do much more. Treasury Secretary Tim Geithner went over there. And some ministers weren’t that happy with a sense that they were being lectured to.
But the stakes are clearly seen as being high on this side, right?
Stephan Richter: The stakes are seen as very high.
We have a situation where the German and Polish finance minister for the first time in history can finish each other’s sentences. That is a cultural revolution in Europe that we shouldn’t shortchange. That’s fantastic.
And I think the administration needs to realize that there’s a sense in Europe that — and the German finance minister at a press conference said this repeatedly and told me also last weekend — that everybody should clean up in front of their own door.
That’s the old G7 principle. That should be the G20 principle. People were surprised that Secretary Geithner flew to Poland in order to give a message of, hey, Europeans need to get it.
The Europeans get it. They are dealing with issues that have never been dealt with: cross-border budgeting, finance ministries, fiscal union, eurobonds, bailouts. This is monumental stuff, and the history of Europe is that they use crises well.
Remember Rahm Emanuel, who said a crisis is a terrible thing to waste? Well, he left town because nobody wanted to take his advice. He’s right. And the history of Europe is that they take the crisis and then transform themselves.
And I am confident that that will happen this time again. And in that sense, Americans can be confident and I think take some inspiration, hopefully, from the European experience to do the hard thing when it’s necessary, rather than blaming each other between Democrats and the Republicans.
After all, relations between Germans and Greeks, I would say, while touchy, aren’t as bad as those here domestically between Democrats and Republicans.
Editor’s Note: Watch the full eight-minute segment from the PBS NewsHour here.