The terms of the 3rd bailout deal between Greece and its creditors brought a lot of issues to the forefront.
Silly me for thinking negotiations had to with economics–modernizing the Greek economy by enacting needed structural reforms, while providing the Greek government with the fiscal space needed to promote growth and address it’s pressing humanitarian crisis (which said structural reforms would only exacerbate in the short run). Instead, the defining elements of the deal were related to personality and politics.
The Germans were mad at the Greeks, so much so that German finance minister Wolfgang Schäuble said perhaps Greece might be better off leaving the Euro–this short-sighted self interest is not suitable behavior for Europe’s de facto leader. Tsipras’s government, for it’s part, apparently did not have a backup plan in case it’s creditors failed to offer a reasonable deal. I know Syriza is new to politics, but you don’t have to be a master negotiator to know that going into negotiations without a backup plan is a flawed strategy.
I was a fan of Tsipras’s government because of the interim agreement it secured in February–the potential for trading structural reforms for fiscal space. But since that point it terribly misplayed its hand. It went into negotiations without a backup plan. It held a referendum at least a month too late–the overwhelming “no” vote would have been a strong bargaining chip had Greece been able to take it back to the negotiating table while still covered under the terms of its prior bailout.
But once those terms expired, and Greek banks closed, the only choices for Greece were Grexit or capitulation. Since there was no plan in place for a Grexit, Greece ended up with the terrible deal it got. That deal–as it currently stands–fails in all regards: financial sustainability, growth prospects, and short term humanitarian concerns.
The International Monetary Fund threatened to withdraw support for Greece’s bailout on Tuesday unless European leaders agree to substantial debt relief, an immediate challenge to the region’s plan to rescue the country.
A new rescue program for Greece “would have to meet our criteria,” a senior I.M.F. official told reporters on Tuesday, speaking on the condition of anonymity. “One of those criteria is debt sustainability.”
The I.M.F. is now firmly siding with Greece on the issue. In a reportreleased publicly on Tuesday, the fund proposed that creditors let Athens write off part of its huge eurozone debt or at least make no payments for 30 years.
The I.M.F. said in its report that a write-down could be avoided, but only if creditors extended the schedule for Greece to repay its debt. The only other alternative to a haircut would be for the eurozone countries to give Greece the money it needs to repay them.
“The choice between the various options is for Greece and its European partners to decide,” the I.M.F. report said.
Greece would need to spend a sum equal to more than 15 percent of G.D.P. annually to pay interest and principal on its debt, according to the latest I.M.F. report.
The implementation of new austerity measures in Greece amid the country’s deteriorating economic crisis must not come at a cost to human rights, a United Nations expert warned today as he urged international institutions and the Greek Government to make “fully informed decisions” before adopting additional reforms.
“I am seriously concerned about voices saying that Greece is in a humanitarian crisis with shortages in medicines and food,” Juan Pablo Bohoslavsky, the UN Independent Expert on foreign debt and human rights, stressed in a press statement today. “Priority should be to ensure that everybody in Greece has access to core minimum levels of economic, social and cultural rights, including the right to health care, food and social security.”
“A debt service burden that may be sustainable from a narrow financial perspective may not be viable at all if one considers the comprehensive concept of sustainable development, which includes the protection of the environment, human rights and social development,” he added.
And of course, as the IMF report highlights, the deal is not even “sustainable from a narrow financial perspective”.
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Kicking the Can or Letting Heads Cool?
If Greece’s creditors, led by Germany, ultimately want to see Greece stay in the Eurozone (for the long run), a friendlier deal is needed. If a “Grexit”, with its short term pain but long term possibilities to return Greece to economic health, is indeed in Greece’s best option given what it’s creditors are willing to offer, why not take that tough medicine and let the healing start? The current deal represents the worst of both worlds–economic pain now and a likely Grexit in the future.
The one positive of this deal is that it did buy time, which should not be undervalued as “Grexit” would be permanent and have terrible geopolitical consequences. But without stimulus (there are talks of a 35 billion euro stimulus fund by 2020 if reforms are fully implemented, but this may be too little too late) and debt restructuring (which cannot be ruled out, but also cannot be counted on), the deal is little more than kicking the can down the road–all while the Greek people continue to suffer.
Greece’s creditors cannot keep dangling future carrots while imposing fiscal restraints which hurt Greece’s already beleaguered citizenry in the here and now. Aid must be synced with structural reforms, or else the Greeks will see their situation go from terrible to worse and reject the terms of this 3rd bailout.
Doing the same thing and expecting different results is the definition of insanity. Greece has tried to implement reforms in order to unlock future aid before, and we see where that got it--a severely contracted economy, depression level unemployment rates, and costly political instability.
This is not the time for more business as usual; this is the time for bold action and trust between Greece and it’s creditors. Unfortunately nothing about the past few months of negotiations suggest this is outcome will be realized.
“The question is never whether America should lead, but how we should lead,” Mr. Obama writes in an introduction to the document, a report that seems to mix legacy with strategy. In taking on terrorists, he argues that the United States should avoid the deployment of large ground forces like those sent more than a decade ago to Iraq and Afghanistan. In spreading democratic values, he says, America should fight corruption and reach out to young people.
“On all these fronts, America leads from a position of strength,” he writes. “But this does not mean we can or should attempt to dictate the trajectory of all unfolding events around the world. As powerful as we are and will remain, our resources and influence are not infinite. And in a complex world, many of the security problems we face do not lend themselves to quick and easy fixes.”
“There is this line of criticism that we are not leading, and it makes no sense,” said Benjamin J. Rhodes, a deputy national security adviser. “Who built the effort against ISIL? Who organized the sanctions on Russia? Who put together the international approach on Ebola?”
The strategy lists eight top strategic risks to the United States, starting with a catastrophic attack at home but including threats like climate change, disruptions in the energy market and significant problems caused by weak or failing states.
Regardless of your opinion on how effectively the Obama administration has handled foreign affairs, it is hard to argue the United States is not leading from the front on major global issues. Yet it is important that our future leaders recognize, as President Obama has, the limits of both our government’s resources and our ability to sustain democratic revolutions through unilateral military intervention.
In a highly interconnected world, confronting global problems is in America’s economic and security interests (not to mention ethical considerations). This does not mean, however, that we should rush headlong into battle without carefully considering the probability of success and costs of alternative courses of action. There are other tools in America’s foreign policy toolkit–the other components of the D.I.M.E (diplomatic, intelligence, military, economic) framework–which should be considered before sending our military (and particularly ground troops) to war.
Military interventions are never quick, easy, or cheap. Even when successful, they leave a power void that must be carefully managed, lest that void be filled by ineffective leaders or extremist groups (or, as is often the case, both). When mismanaged, even the most well intended interventions can be counter-productive, fueling anti-Western propaganda and empowering the very ideologies we seek to destroy.
Hagel, making his final appearance at NATO as U.S. defense chief, said the alliance faced several challenges, including violent extremism on its southern rim, Russian aggression in Ukraine and training security forces in Afghanistan.
“I am very concerned by the suggestion that this alliance can choose to focus on only one of these areas as our top priority,” Hagel told a news conference. “And I worry about the potential for division between our northern and southern allies.”
“The alliance’s ability to meet all these challenges at once, to the east, to the south and out-of-area, is NATO’s charge for the future,” Hagel said.
“This is a time for unity, shared purpose and wise, long-term investments across the spectrum of military capability,” he added. “We must address all the challenges to this alliance, all together and all at once.”
Often times, one can speak most candidly when their tenure at a position is coming to an end. Those who oppose the ideals of NATO will not coordinate their attacks one at a time. In fact, knowledge that NATO resources are strained (due to say, simultaneous humanitarian crises, a wear weary American public, or underinvestment in the global security commons by the rest of the international community) is only likely to embolden our enemies. While NATO needs to be able to effectively counter more than one major threat at a time, this does not mean the American army alone needs that capacity.
As the world becomes “smaller”, the exclusively Northern Atlantic nature of NATO should be reconsidered. Two major democracies–India and Japan–are not members of NATO, limiting the groups ability to fulfill its goals. Furthermore, having regional actors involved in security operations helps builds legitimacy, underscoring the strategic importance of greater Indian and Japanese involvement.
President’s Obama and Modi recently met and discussed, among other things, defense cooperation. India must become a major partner in promoting peace and democracy in the Middle-East (particularly in coordinating the fights against the Afghan and Pakistani Taliban) even as it itself modernizes.
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More Turkey Please:
An Op-Ed published in the NYT today by two Arab professors teaching at American Universities was very supportive of Turkey’s level of involvement in the Middle East:
There have been sharp disagreements over the 2013 coup in Egypt, the Israeli-Palestinian conflict and the need for intervention in Syria. Turkey’s critics have called into question its reliability as a NATO ally, including in the fight against the radical Wahhabi group known as the Islamic State.
But much of this concern is misguided. The ongoing crises in the Middle East have only underscored Turkey’s pivotal geostrategic position: It’s no surprise that Pope Francis, President Vladimir V. Putin of Russia and Prime Minister David Cameron of Britain have visited Ankara in the past few months. And Turkey’s detractors, partly because they do not understand the sources of its new assertiveness, fail to see that its transformation actually serves America’s long-term interests.
The United States has long allowed client states like Saudi Arabia, the United Arab Emirates and Israel to pursue shortsighted goals in the Middle East. This has only brought despotism and strife. Washington’s failure to fully support the democratic government of Mohamed Morsi and his Muslim Brotherhood in Egypt contributed to its collapse, and so to the instability and violence that have occurred there since. And it was President Obama’s cynical abandonment of the Syrian opposition during the first two years of the uprising against Mr. Assad that set the stage for the advent of the Islamic State.
To avoid any more such calamities, policy makers in Washington, and other Western capitals, should abandon their counterproductive approach: They should embrace Turkey’s growing, and positive, engagement in the Middle East.
I could not agree more.
But I do not think America’s leaders are opposed to Turkey asserting itself in the Middle-East. Indeed, as a primarily Muslim democracy and NATO member, it must play a large role in Obama’s plan of relying more heavily on regional partners in curtailing Islamic extremism.
I agree the Obama administration was wrong on Syria and Egypt, I am on the record saying as much. But in this case, two wrongs don’t make a right. Turkey cannot afford to play the moral high ground on these issues while the dogs of war bark at it’s door-step. Furthermore, Erdogan’s delayed and half-hearted support of the Kurdish peshmerga reeks of political calculus, not someone who considers ISIS a serious threat to regional stability.
So I am not exactly sure what these professors are talking about–they appear to be building a straw-man just to knock him down. I think it is pretty clear the Obama administration wants more Turkish involvement, including ground forces, in the fights against Assad and ISIS, not less.
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Japan and Germany (Finally) Begin to Shed Their Post-WWII Identities:
Prime Minister Shinzo Abe has said that he wants to start the process of revising Japan’s Constitution as early as next year, a senior lawmaker in his party said Thursday, giving the clearest indication yet that the Japanese leader will seek to change a document that has undergirded the country’s postwar pacifism.
Mr. Abe told Hajime Funada, the leader of a group of Liberal Democratic Party lawmakers, on Wednesday that the best time to begin the difficult political task of amending the Constitution would be after elections for the upper house of Parliament, scheduled for the summer of 2016…
The Constitution, which also prohibits Japan from possessing the means of war, was written by American occupiers after World War II to prevent the defeated nation from ever again engaging in militarist expansion. The document proved so popular among Japan’s war-weary people that it has never been amended.
But Mr. Abe has seized on the murders of the Japanese hostages to make some of his strongest appeals yet for unshackling the nation’s military. Saying Japan was unable to save the hostages, he has called for easing restrictions on its purely defensive armed forces to allow them to conduct rescue missions, evacuations and other overseas operations to protect Japanese nationals.
The hostages, Kenji Goto, a journalist, and Haruna Yukawa, an adventurer, were beheaded a week apart by the Islamic State, a militant group in Syria and Iraq that had demanded a $200 million ransom for their release. The murders outraged and sickened Japan, which had seen itself as largely immune to the sort of violence faced by the United States and other nations that have been involved militarily in the Middle East. Since 1945, Japan has adhered to a peaceful brand of diplomacy that has seen it become a major donor of economic and humanitarian aid to the Middle East and elsewhere.
It remains unclear whether the shock of the killings will swing the Japanese public in favor of Mr. Abe’s harder line. Since the murders, opposition politicians have stepped up attacks on the prime minister, accusing him of provoking the Islamic State by allying Japan more closely with the United States-led efforts to destroy the militant group. Just days before the ransom demand appeared, Mr. Abe pledged $200 million in nonmilitary aid to countries in the region confronting the Islamic State.
However, on Thursday, the lower house of Parliament unanimously adopted a resolution condemning the killings and calling for increased coordination with the global community to combat terrorism.
Germany must ramp up defense spending starting in 2016 to ensure its military is able to take on a bigger role in crisis zones, according to two top lawmakers in Chancellor Angela Merkel’s coalition.
Germany spends about 1.3 percent of gross domestic product on the military, short of the 2 percent level pledged informally by North Atlantic Treaty Organization allies.
Merkel’s spokesman has said no additional funding will come in the short term as the government struggles to hold on to its target of balancing the budget next year and with 2015 spending already largely negotiated.
Germany must engage in international missions “earlier, more decisively and more substantially,” Gauck told the Munich Security Conference on Jan. 31.
Fiscal responsibility is usually good, but like anything, overzealous attachment to an ideology can preclude pragmatic policy. Economics is context sensitive, and in the current context, Germany’s dedication to running a balanced budget has left holes in the Eurozone economy and the global security commons.
A large scale increase in German defense spending would bolster global security efforts (particularly in countering Russian aggression in former Soviet Republics), while simultaneously providing a partial answer to Europe’s economic stagnation (by “buying European“).
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Please do not confuse my views with war-mongering or advocating for the military-industrial complex, I just recognize that there are bad actors in the world who only understand realpolitik. In order to provide room for the forces of human dignity and freedom to flourish, these bad actors must be marginalized.