Can European Leaders Go Big?

With Spain, Italy, and Cyprus reeling, the stakes are high for the Brussels summit—but Germany stands in the way of broad reform.

(AP Photo/Philippos Christou)
(AP Photo/Philippos Christou) A woman passes by a branch of Bank of Cyprus in central Nicosia, Cyprus, Thursday, June 28, 2012. Cyprus became the fifth eurozone country this week to ask for a bailout from its partners in the currency union in order to prop up its Greece-exposed banks and flagging economy. Officials from the European Commission, the European Central Bank and the International Monetary Fund will begin assessing next week how much bailout money Cyprus will need. The European Summit today and tomorrow in Brussels is the latest in a series of make-or-break moments for the European project. On many occasions since May 2010, when Greece was first cut off from market access, European leaders have been called upon to make a bold leap forward in the policy integration of the Eurozone—the only way to convince investors of the iron irrevocability of the common currency. Under constant pressure from the ongoing crisis, they have often seemed to be making the big decisions to...

The Army's Bizarre Cover-Up

(AP Photo/ U.S. Navy Petty Officer 2nd Class Ernesto Hernandez Fonte)
Lieutenant General William Caldwell, a rising star in the Army who formerly oversaw the training of Afghan security forces, was recently accused of impeding a 2010 investigation of corruption in the Afghan military medical corps to avoid affecting the outcome of congressional elections, as reported by Danger Room . Caldwell, who now commands the U.S. Army North based in Texas, was supposedly worried that a revelation of mismanagement and neglect would hurt Democrats’ electoral chances, damaging the close rapport he enjoyed with Obama. “He calls me Bill,” Caldwell is said to have told his officers. As Danger Room notes, his fears weren’t without basis; after all, General Stanley McChrystal was relieved of his command for immature comments just a few months prior. Caldwell’s relationship with the President Obama may be about to take a turn for the worse. But don’t count on the president taking much heat from the voters. To begin, Americans don’t care much for foreign policy; in 2010,...

The Simmering Sinai

Despite border clashes, Israel must keep itself out of Egypt's roiling politics.

(AP Photo/Tsafrir Abayov)
The polls had closed a few hours earlier in Cairo, after two days of voting for a president who may or may not have any power. The Muslim Brotherhood was preparing to claim victory. Meanwhile, in the desert to the west, three gunmen crossed the border between Egypt's Sinai Peninsula and Israel, attacked an Israeli crew building a border fence, and killed a worker, an Arab Israeli named Saeed Fashafshe. The human mind likes to make connections, so it's easy to draw a thick black line of cause-and-effect between these events: One could conclude that the revolution alone is at fault for the Egyptian regime losing control of the Sinai desert—or worse, that the ascendant Islamicists are encouraging the border violence. Those reflexive interpretations ran through Israeli media reports this week. The reality is more complicated. Nonetheless, the fact that the border and Egyptian politics are heating up at the same time demands attention. For Egypt's wrestling political forces, the lesson...

A Paralyzed G-20

(AP Photo/Andres Leighton) France's President François Hollande smiles at the end of a news conference at the G-20 summit in Los Cabos, Mexico, Tuesday, June 19, 2012. All the bland platitudes coming out of the Group of 20 Meeting in Mexico can’t disguise the absence of progress on the European crisis. German Chancellor Angela Merkel is totally dug in on the proposition that Greece, Portugal, and Spain need to stick to the austerity medicine that will only deepen the collapse and embolden more speculative attacks on government bonds. President Obama has just about no leverage in this situation. On Monday, the European Commission President, Jose Barroso, a conservative former Portuguese prime minister, and close Merkel ally, broke his diplomatic cool and declared that he was in no mood to be lectured by Americans on what Europe needed to do to restore growth. This crisis was not originated in Europe," Barroso said. "This crisis was originated in North America. Many in our financial...

Greece Gives the Euro One Last Shot

(AP Photo/Kostas Tsironis)
(AP Photo/Kostas Tsironis) A supporter of Radical Left party (SYRIZA) sits in front of a graffiti painted wall of Athens' university, where party's main election center is located on Sunday, June 17, 2012. The graffiti on the wall reads "Do not live like slaves , Revolution Now ". Alexis Tsipras and his party shot to prominence in the May 6 vote, where he came a surprise second and quadrupled his support since the 2009 election. Syriza party has vowed to rip up Greece's bailout agreements and repeal the austerity measures, which have included deep spending cuts on everything from health care to education and infrastructure, as well as tax hikes and reductions of salaries and pensions. It was a night of high drama, after a tense pre-election period that often descended into violence. By the end of it, Greek voters had narrowly given the pro-bailout forces one last stab at salvaging the adjustment program with Greece’s creditors and avoiding a disastrous exit from the euro. This has...

Will Greece Drop the Mic?

The country's elections on Sunday amount to a referendum on austerity—and could lead to an exit from the euro.

(AP Photo/Petros Karadjias)
(AP Photo/Petros Karadjias) The head of Greece's radical left-wing Syriza party Alexis Tsipras waves to his supporters during a rally at Omonia square in Athens, Thursday, June 14, 2012. Greece faces crucial national elections on Sunday, that could ultimately determine whether the debt-saddled, recession bound country remains in the eurozone. “Not a step back: End the troika and the memorandum.” Thus read one of the placards hung up on a lamp post close to Omonoia Square in downtown Athens, where Syriza—the surging left-wing party led by Alexis Tsipras—held its major pre-election rally last night. The mood in the densely populated square was equally defiant. “It’s not Syriza’s policies that will lead us out of the euro. It’s the policies of the memorandum [signed between Greece and the International Monetary Fund]. They lead to exit with mathematical certainty,” says Panagiotis, a retired banker and self-described “troubled Greek,” referring to the demanding terms of Greece’s bailouts...

Europe’s Tragic Farce

(AP Photo/Daniel Ochoa de Olza)
(AP Photo/Daniel Ochoa de Olza) Spain's Prime Minister Mariano Rajoy leaves after a control session at the Spanish Parliament, in Madrid, Wednesday, June 13, 2012. The interest rate Spain would have to pay to raise money on the world's bond markets continued to rise Wednesday amid worries that a planned bank bailout might not be enough to save the country from needing an overall financial rescue. Europe’s top politicians, led by German Chancellor Angela Merkel, seem determined to repeat the same mistakes over and over again. Last weekend, the financial crisis seemed to be contained for the moment when the Germans and the European Central Bank agreed to commit 100 billion euros through the European Union’s (E.U.) rescue funds to recapitalize Spain’s faltering banking system. The Spanish government bargained hard, and won an agreement that the bailout would not be tied to new austerity demands of the sort imposed on Greece and Portugal. But as more details emerge, it’s clear that the...

Structurally Flawed

A face-off over the legality of Israeli settlement has left Benjamin Netanyahu weaker.

(AP Photo/Oded Balilty)
Before July 1, five apartment buildings in a West Bank settlement will be cut from their foundations and dragged over the hilly terrain to a new location elsewhere in the community. That's Israeli Prime Minister Benjamin Netanyahu's plan, anyway. From an engineering perspective, the idea is "delusional," as one expert put it. That's an understated evaluation. If the three-story buildings are moved and survive, it's reasonable to assume that they'll be riddled with visible and unseen fissures—just like Netanyahu's Likud party, his ruling coalition, and the jerrybuilt legal underpinnings of Israeli settlement in occupied territory. The interesting question is which of these flawed structures will collapse first. The idea of moving the buildings, home to 30 families, is part of Netanyahu's response to the worst political crisis he has faced in his current term. A month ago, the country's Supreme Court issued an absolutely final, don't-bother-us-again, we're-fed-up-with-you order to...

Germany's Tightrope Act

BERLIN —Germany, uniquely, is prospering while the rest of Europe sinks deeper into recession. And the recession is substantially the result of the very austerity that Chancellor Angela Merkel is imposing on the other member nations of the European Union. Why is Germany spared? One good reason and two bad ones. The good reason is that Germany promotes manufacturing, with sensible training and technology policies. Its industries have partnerships with effective unions. So Germany’s huge export surplus means that it can have tight budget policies at home and still have plenty of good jobs. A bad reason is that the same euro that is overvalued for Greece is undervalued for Germany. So Germany benefits from a tacit subsidy—an artificially cheap currency, which makes its exports cheap. The second bad reason is that as capital flees from weak economies, it comes to Germany, leaving Germans with artificially low interest rates—another subsidy at the expense of its neighbors. But even Germany...

The Austerity Experiment

(Press Association via AP Images)
BRUSSELS—Depending on whose narrative you believe, the deepening economic crisis in Greece proves (a) that the dysfunctional and dissolute Greeks just couldn’t get their act together and keep the reform commitments that they made in exchange for debt relief from the European authorities; or (b) it only proves that austerity breeds more austerity. Cut public spending and wages, and raise taxes in a recession, and you just dig yourself a deeper hole. Since only about 20 percent of the Greek economy is exports and less than 40 percent of export costs are wages, slashing wages just doesn’t produce much of a bounce, especially when the rest of Europe’s economy is contracting too. Greece is a lousy test of the austerity-as-cure hypothesis, because left, right, and center agree that Greece has an encrusted system. When I recently interviewed former Prime Minister George Papandreou, he referred to Greece as a “clientist” state—meaning government by crony constituency. When the right governs,...

A Tough Choice for Mexico

The country's presidential elections are a referendum on the drug war.

(AP Photo/Marco Ugarte)
(AP Photo/Marco Ugarte) Enrique Peña Nieto, presidential candidate for the Institutional Revolutionary Party (PRI), speaks to supporters at a campaign rally in Nezahualcoyotl, Mexico, Saturday, April 28, 2012. Mexico will hold presidential elections on July 1. It may barely make a blip on our political radar screen, but on July 1 Mexico is slated to elect a new president for the next six years. Plagued by out-of control violence and chronic poverty, the country is in desperate need of new leadership. Yet holding a commanding lead in the polls is Enrique Peña Nieto, an old-guard candidate of the discredited Partido Revolucionario Institutional (PRI), which ran the county as a one-party dictatorship for 70 years before being ousted in 2000. Peña Nieto is telegenic and has a TV star wife. But he has little political charisma, a scandalous personal life (at least two acknowledged illegitimate children), a modest intellect, and an undistinguished record. His party remains mired in...

Actually, it’s Greece’s Election

ATHENS —To hear the leaders of the European austerity party and a lot of commentators tell it, the upcoming Greek election will be a “referendum” between keeping Greece’s austerity commitments and staying in the Eurozone—or recklessly walking away. A vote for a centrist coalition, supposedly, is a vote for staying in; a vote for the left is a vote for throwing caution to the winds and destroying Greece. But viewed from Greece, that framing is totally wrong. The leftist Syriza party, actually a coalition of 12 (!) parties, substantially displaced social-democratic PASOK as the radical party in the deadlocked May 6 election, where no governing coalition could be formed. In the do-over election scheduled for June 17, Syriza is could well come in first with at least 25 percent of the vote. Under Greek law, where the top performing party gets a bonus of 50 seats in parliament, that should be enough to give Syriza in coalition with a couple of smaller parties a governing majority. In the...

The Issue Europe Won’t Face

(Flickr/Davide Olivia)
Europe’s leaders emerged far apart at their summit dinner in Brussels Wednesday night. They could not even agree on relatively easy measures to contain the escalating crisis, such as Eurobonds or a greater role for the European Central Bank (ECB). But at the core of the crisis is an issue that Europe’s leaders are even more reluctant to take on—the ease with which hedge funds and other speculators can drive a small economy into the ground. When the socialist government of George Papandreou took office in 2009, his people soon found that basic statistics had been fudged by its predecessor conservative government, and that Greek debt was higher than previously reported. But the Greek economy was still in relatively decent shape. A downgrade by credit rating agencies ensued, followed by massive speculation against Greek bonds by outfits like Goldman Sachs and Deutsche Bank as well as hedge funds. “Spreads”—the difference between Greek government borrowing costs and those of Germany—...

Merkel in the Minority

(Flickr / Environment Blog)
ATHENS —The European austerity caucus led by German Chancellor Angela Merkel is coming apart, but Germany retains the power to block the newly forming coalition for growth as a solution to the eurozone crisis. Tonight’s summit dinner in Brussels is unlikely to produce a breakthrough. But what a difference an election makes. Since Francois Hollande was elected President of France less than three weeks ago, leaders that had been bullied into siding with the Germans are breaking loose. Here in Greece, reckless talk by leaders of the European Central Bank that they might not back Greek banks if Greece tried to walk away from the terms of the austerity deal led to runs on Greek banks. Greek citizens lined up at ATM machines to convert their savings to cash before Greece was pushed out of the euro. Last week, that loose talk ended. ATM machines are quiet. The ECB promised that it would get some $25 billion euros to the banks, more than the amount that had been withdrawn in panic. Greek...

What Real Anti-Gay Bullying Looks Like

In much of the United States, Pride parades have become more or less the equivalent of St. Patrick's or Mardi Gras parades, or really, any ethnic festival: a subcultural celebration where everyone's welcome, with floats and trinkets and T-shirts abounding. It's not quite the same in former Soviet bloc countries. Take a look at what happened to Svyatoslav Sheremet, head of the Gay Forum of Ukraine, for trying to arrange a Pride Parade in his country. Then scroll down past the Russian, here , to see pictures of the results. You don't need Google Translate to understand. Hatred is ugly.