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As Greek Drama Plays Out, Where Is Europe?

As Greek Drama Plays Out, Where Is Europe?

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NEWS ANALYSIS
 As Greek Drama Plays Out, Where Is Europe?
BySTEVEN ERLANGER Published: April 29, 2010
 WASHINGTON — With new European Unionleaders practically invisible and some national leaders acting largely for domesticpolitical reasons, the burden of shaping a rapid and crediblerestructuring program forGreecehas fallen primarily to theInternational Monetary Fund— exactly where proud European Unionleaders had insisted it should not be.Once again — as during the 2008financial crisisand the more recenthalt in European air traffic due to volcanic ash— Europeanleaders have failed to surmount national interests andcobble together a coherent policy quickly enough toaddress a problem. In the process, they may have donepermanent damage to the credibility of the EuropeanUnion.“There is no doubt that the European project has sufferedstructural damage from this,” said Jacob Kirkegaard, aresearch fellow in European affairs and structural reform atthePeterson Institute for International Economicshere.“It’s clear that the I.M.F. is the last man standing and isstructuring the program.”Criticism is rising about the competence of Europeanleaders, which has worsened the plight of all the countriesin the euro zone.Senior United States officials, while not wanting tointerfere in a European problem, have nonetheless expressed their anxiety to Europeancounterparts and to the monetary fund itself.President Obamacalled Chancellor Angela Merkelof Germany on Wednesday to lend his support and encouragement for her  willingness to take a bolder position to try to calm the markets.Mrs. Merkel has been the central figure in the debt crisis, as she has tried to respond toGerman voters’ displeasure at having to bail out Greece, after years of bailing out easternGermany. She delayed action on the problem for months, hoping to put it off until aftercritical regional elections on May 9.
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Euro Rises After I.M.F. Increases Aid Pledge to Greece(April 30,2010)Europe Acts Swiftly on Long-Delayed Greek Bailout(April 30,2010)Times Topic:European Union 
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Dominique Strauss-Kahn, background,I.M.F. director, and Robert Zoellick,World Bank president, in WashingtonSunday.
 
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Ultimately, that proved impossible. But her foot-dragging, combined with her insistencethat Greece pay a severe long-term price for its profligacy and that the German Parliamentapprove any bailout, gave the markets both reason and room to run up the price of Greek debt to unsustainable levels. That forced theInternational Monetary Fund and theEuropeans on Wednesday to practically quadruple the commitment to Greece, to try tocalm the markets and not turn their attention to Portugal, another weak reed.“The fact that a German regional election can play such a disproportionate role in messingup efforts to contain what was a much smaller crisis several months ago is astonishing,”Mr. Kirkegaard said. And the fact that there will be noEuropean Union summit meeting until May 10, after the German elections, “is so blatantly political,” he said.“This is no way for an E.U. that has to contain an accelerating crisis and market panic to behave,” Mr. Kirkegaard said.TheEuropean monetary unionwas simply “not ready for bad weather,” said Janis A.Emmanouilidis, a senior policy analyst at theEuropean Policy Centerin Brussels, saying ithad no mechanisms in place to deal with issues of debt or the potential default of amember state. “In the absence of such clear mechanisms, you need political leadership,” hesaid. “But the past months have seen a lack of leadership.”The same problem was raised earlier this month by the ban on European air travel becauseof the ash spewed by an Icelandic volcano. With no European Union agreement governingEuropean airspace, national leaders struggled, with astounding delays, to coordinate apolicy while both airlines and passengers suffered.But even worse, “the current crisis has done enormous political damage,” Mr.Emmanouilidis said. “It is decreasing the trust among member states,” he said, withGermany feeling betrayed by the “Club Med” countries of southern Europe, while thosenations feel that Germany has procrastinated and shown an egregious lack of solidarity.The outspoken Greek deputy prime minister, Theodoros Pangalos, has said that EuropeanUnion leaders were “not up to the scale of the task” in dealing with the crisis.“I believe if Delors was in charge in Europe, Mitterrand in France and Kohl in Germany,things would not be the same,” he told Greek television in February, referring to the formerpresident of theEuropean Commission, Jacques Delors; the former French president,François Mitterrand; and the former German chancellor,Helmut Kohl.  While there is blame to go around on the national level, there is also finger-pointing at thenew European Union leadership.Herman Van Rompuy , president of the EuropeanCouncil, has been largely invisible in his efforts to coordinate national leaders. A French member of theEuropean Parliament, Philippe Juvin, vented to Agence France-Presse: “Where is the president of the European Council? What is the president of theCommission doing? Is there a European pilot in the Greek crisis? Or are they waiting forthe collapse of the euro?”But theLisbon Treaty that created Mr. Van Rompuy’s position, and which was intended tomake the enlarged European Union more agile and coherent, deliberately left out powersfor coordinating fiscal policies, which are the fiercely guarded prerogative of the separate
 
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nations. Even so, countries like Germany can only blame themselves for not insisting onrealistic European oversight of Greek statistics, which were widely believed to be false fortwo decades.Some analysts argue that this latest crisis will inevitably mean further Europeanintegration, with more fiscal oversight and coordination. Constance Le Grip, a Frenchmember of the European Parliament, said that “it is clear that the E.U.’s hesitations have worsened the Greek situation.”She added: “Pragmatism and the E.U.’s adaptation skills are not sufficient anymore. Wehave to create new institutional responsibilities, for a new European economicgovernment.”But others are doubtful, arguing that most Europeans are already fed up with “moreEurope” and that Germany, which might like to meddle in the budgets of others, wouldnever accept any meddling in its own. It is also very likely that the GermanConstitutionalCourt, which has put limits on the ceding of sovereignty, would throw out any suchoversight.Some, like Mr. Kirkegaard, fear that the German court will rule against the Greek bailoutfunds, too, especially if they are spread out, as now envisaged, over a three-year period.Still, this continuing crisis is leading to a more fundamental one, about European andnational capabilities. “Questions are asked to nations, not to the E.U. — but nations cannotdeal with this problem alone,” said Dominique Reynié, director of theFoundation forPolitical Innovationand a political scientist at theInstitut d’Études Politiques de Paris. “The silence of the E.U. and its institutions has become deafening. It is incapable of demonstrating that an entity called Europe exists. This is a situation that cannot go on.”The European Union “seems to be in a state of permanent self-promotion,” he said. “But itcannot ask its voters to relinquish part of their nations’ sovereignty and then not answerthe call when there’s a problem.”
 Maïa de la Baume and Nadim Audi contributed reporting from Paris.
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Past Coverage
In Greek Debt Crisis, a Window to the German Psyche(May 3, 2010)Germany Approves Assistance for Greece(May 3, 2010)POLITICUS; Pondering the German Question(May 3, 2010)Greece Takes Its Bailout, but Doubts for the Region Persist(May 2, 2010)
A version of this news analysis appeared in print on April 30, 2010, onpage A1 of the New York edition.
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