Revelation from the European Debt Crisis: U.S. Strength and Ambitions Do Not Match

When Greece caught everyone by surprise by announcing that it would hold a referendum on the assistance program offered by the eurozone, many were caught off guard. The Obama administration was one of them.

In the last few months, the U.S. government has gone through a mix of feelings, from despair, frustration, worry, doubt and helplessness, as it monitored every development for an agreement to save the single currency. Besides the anxiety caused by the Greek crisis, the U.S. feels some sympathy toward the eurozone, which has had difficulty in reaching an agreement. At the same time, the U.S. is also watching the fire from across the ocean, maintaining a kind of apathy because of its own serious financial problems.

In the last few weeks, the two major political parties in the U.S. have not been able to reach a consensus, not even once, on how to raise funds for the government. There are 17 member countries in the eurozone; so the U.S. understands how big of a challenge it faces in reaching a consensus under such complicated circumstances.

The Obama administration has been very careful not to publicly lecture the Europeans, and there are plenty of reasons for this. The U.S.’ own efforts in reaching a long-term deficit reduction agreement have already encountered numerous crises, one after another, just this year; and the U.S. still has not reached any clear agreement.

The U.S.’ relative restraint toward the eurozone in public, however, should not be misunderstood as lack of action. Obama has already made many private phone calls to European leaders. The U.S. has been urging European leaders to boldly resolve the current issues; otherwise, they face the risk of their actions always lagging behind. Although the Europeans don’t want to be at the mercy of the financial market, their lack of action would further expose them to market threats. However, the U.S.’ influence, politely speaking, is very limited. Even though the Obama administration wants to provide support to the eurozone, it will not be able to obtain a single penny from Congress.

The U.S. can certainly utilize its influence through the International Monetary Fund (IMF), but the IMF’s ability to carry out a true rescue operation to help the eurozone is also very limited. Last year, each fund contributor agreed to expand IMF resources, a large portion of which was to be borne by the U.S. However, to avoid the Congress suspecting that it would be paying the bill for saving the eurozone, the Obama administration did not even submit its proposal to Congress. If someone is curious about what the world will look like after the decline of U.S. leadership, then the eurozone crisis is a wide-screen display of the West’s weakness.

The U.S. believes that Europe has sufficient resources to raise funds for itself and possesses a system that can work with the IMF to utilize these resources. If so, the possibility of harm would double from Europe extending its hand to countries besides the U.S. for assistance. Not only would that allow the countries providing assistance to achieve big propaganda victories, but also to exert political influence on Europe’s trade and security policies.

So, based on Europe’s performance so far, the policymakers in Washington cannot rest assured that “the Europeans hold the solution in their own hands.” Facing the European debt crisis, the U.S. administration, on the one hand, does not want other people to interfere; but on the other hand, its strength does not match its ambitions. And such a dilemma cannot be related easily to other people. For a president who will soon be entering a potentially critical and intense election year, such an unfavorable situation would be very uncomfortable.