10 July 2015

Why the Greek tragedy matters to the United States


Margaret Thatcher remarked in her final book, Statecraft, that “during my lifetime most of the problems the world has faced have come, in one fashion or other, from mainland Europe, and the solutions from outside it.” Two years after the Iron Lady passed away her message on continental Europe remains a powerful one. Her warnings against the rise of a European superstate, and the dangers of governments addicted to spending other people’s money powerfully resonate today.

The events unfolding in Greece are a microcosm of a broader crisis at the heart of Europe, involving not only the consequences of decades of reckless spending by successive Greek governments (mirrored by governments across southern Europe, from Spain to Italy and Portugal), but also rampant supranationalism, with European institutions and unelected and unaccountable bureaucrats dictating terms to a nation state as though it were shackled at the ankle to its paymasters in Brussels and Berlin, with no right to question the relationship. European Commission President Jean-Claude Juncker embodied the arrogance of the EU’s ruling class when he dismissed the results of last Sunday’s Greek referendum as an irrelevant “circus.”

Looking beyond the immediate impact on US stock markets, what does the Greek crisis mean for the world’s only superpower, wearily watching events unfold across the Atlantic? A great deal in fact. The Greek tragedy should make US leaders rethink their own approach towards debt and government spending, while prompting a wholesale reassessment of America’s misplaced backing for the European Project. Washington must also be prepared to stand up to Moscow’s attempts to take advantage of Greece’s plight, and address the security implications of the refugee crisis impacting Europe.

1. A warning to America

The Greek crisis is a warning to the United States about the dangers of big government spending and ruinous debt. There are many US politicians who cling to the belief that ever more government spending is the way forward, as America’s debt mountain continues to grow. A sizeable chunk of the American electorate favours European-style government intervention over a free market approach. An astonishing Rasmussen survey conducted in November 2012 found that 45 percent of Democrats hold a favourable view of Socialist ideology. In the last few years, the United States has increasingly come to resemble the kind of big government, high tax, heavy spending social welfare societies that dominate the European Union. Indeed, many officials in the Obama administration would fit in comfortably in the halls of the European Commission. America’s federal debt increased as a percentage of GDP from 40 percent to over 70 percent in just the first four years of the Obama presidency, and now stands at a staggering $18 trillion.

2. The European Project is crumbling

The Greek crisis demonstrates how flawed the European Project is, and why the US should rethink its support for a federal Europe. For decades successive US governments have backed the concept of ‘ever-closer union’ in Europe, in the belief that the European Project would promote harmony and end discord in a continent ravaged by two world wars. As the Greece debacle has shown, however, tensions within Europe are actually rising as a result of enforced supranationalism, with the Greeks being treated in a humiliating fashion with complete disregard for self-determination and national sensitivities. The Greece issue has also highlighted the fact that the Eurozone has always been an intensely political project, far more so than an economic one. What the Eurocrats fear above all from Grexit is the crumbling of the edifice of the European Union itself, with its grandiose ambitions of being a superstate that can challenge even the United States.


3. American leadership is being tested

The Greek crisis is a test of American leadership on the world stage, and an opportunity for the US to call for economic freedom and sovereignty in Europe. So far, President Obama has been a deer in the headlights on the issue, as though the United States were a hapless bystander watching a train wreck unfold in the distance. There is, however, a clear message that US policymakers should be making with regard to Greece and the future of Europe: economic freedom matters, and a long-term solution to the vast financial problems faced by Greece and a multitude of European countries can only be addressed by advancing policies that cut government spending while creating the conditions that spur economic growth – including a business friendly environment that encourages entrepreneurialism and foreign direct investment while generating prosperity and opportunity for all.

Great Britain demonstrated during the Thatcher era how this could be done, and Ronald Reagan championed the message of economic liberty in the United States during the economic revolution of the 1980s. This is a message that US leaders, especially conservatives, should be advancing at home and abroad, coupled with calls for deep-seated welfare and entitlement reforms. The economic challenges being faced by US and European politicians are similar, and the free market solutions the same.


4. Growing Russian influence in Greece

The US must respond to growing Russian influence in Greece, and Moscow’s attempts to break Greece away from the West. Vladimir Putin senses a clear opportunity in Athens, and his regime has made a series of overtures to the Tsipras administration, even dangling the prospect of Russian financial backing for the embattled Greeks. Moscow’s goals are clear: to entice the Greeks to block European sanctions against Russia over its invasion of Ukraine, and to cultivate a partner embedded within the NATO alliance, situated at a strategically important location in the Mediterranean.  In vampire-like fashion, President Putin is feeding off the decay that has set in in Greece, exploiting the insecurity and resentments of the Greek people, many of whom feel abandoned and belittled by their European partners. So far, Washington’s voice has been muted on Russia’s growing influence in the region, but this is not a moment for the United States to remain silent. The US should make every effort to reassure the Greeks that their future lies within NATO, and actively rebuff Putin’s attempts to split the Western alliance in standing up to Russian aggression over Ukraine. The Obama administration has paid far too little attention to events in southern Europe since taking office, and Greece’s growing courtship with Russia should be a wake-up call for the White House.


5. Security implications for the West

The refugee crisis affecting Greece and much of the EU has important security implications not only for Europe but the US as well. The more than 130,000 refugees and economic migrants that have entered the EU this year from North and East Africa, Syria, Iraq and Afghanistan via southern Europe, with large numbers making their way through Greece, should be of major concern to Washington. Greece, which borders Turkey, currently holds 10,000 illegal immigrants in detention centres, and has even threatened to release them as relations with EU creditors have deteriorated. With the growing ISIS threat in Libya, and the huge ISIS-driven exodus out of Syria, the threat of Jihadist infiltration through the inflow of migrants into the EU is a very real one, not least against a backdrop of growing desperation in Greece.

Nile Gardiner is the Director of the Margaret Thatcher Center for Freedom at the Heritage Foundation in Washington, D.C.