Americans Remain Worried for the Future of Europe
12/12/2011 | Mise à jour : 15:03
In the eyes of American politicians and members of the press, the fundamental Euro-zone problems won’t be resolved by austerity alone.
There were neither congratulations nor relief in the White House after the EU accord on government reform adopted in Brussels last Friday.
The best that Barack Obama had to say was that the accord showed progress.
Jay Carney, Obama’s spokesman, said that the White House was still waiting for concrete change in Europe.
He wasn’t the only American to say so. Last week, American Treasury Secretary Timothy Geithner urged Europeans to act decisively. He spent three days in Europe on a mission to tell Europe that the summit on December 9th was a “last chance” to restore American confidence in Europe.
If Friday’s summit really was the last chance, then Europe has failed. A survey of the American press quickly showed that confidence was not restored by Friday’s European accord.
American press has little faith in summit
On Friday, it was immediately obvious that the editorial boards of America’s top newspapers had little faith in the summit. In fact, the American press poked fun at the Europeans and their new “groundbreaking” summit.
“The script could have been written in advance—Europe's leaders, meeting amid market turmoil and dire predictions about the consequences of failure, came together in Brussels Thursday night and Friday, and sure enough, they all went home declaring victory,” said an editorial in the Wall Street Journal.
A New York Times editorial took the same tone. The editorial said that the New York Times had lost count of how many “historic” summits had been celebrated, only to fail shortly thereafter.
The New York Times editorial criticized measure of universal austerity pushed by Germany, saying that austerity could threaten growth. The editorial also said that Europe has still not set aside sufficient bailout funds for Italy and Spain.
“[The accord] still leaves the Euro zone without a lender of last resort, like America’s Federal Reserve, to defend vulnerable countries and banks from market panic,” the daily wrote.
The Washington Post, another American daily that focuses on political coverage, said in an editorial that Europe is still “on the brink.”
“What we have is a promise to make a promise,” the news daily of American’s capital city said.
In another article, the Wall Street Journal said that the summit didn’t go far enough.
“After two years of deepening crisis, it had become apparent to everyone that there could be no solution unless the euro zone completed the fiscal and political union necessary to underpin economic and monetary union,” the wall Street Journal said.
Like other newspapers, the Wall Street Journal said that the main problems with Friday’s accord were that the austerity measures were not accompanied by plans for sustainable growth and that the allocated bailout funds were not sufficient. The editorial also pointed out that European leaders all had domestic agendas and their failure to compromise was tied to their attempts to make peace at home.
“Not enough for the scale and scope of the European crisis”
Mohammed el-Erian, the CEO of PIMCO—one of the world’s largest global investment firms— and former IMF official, agreed with the statements made by the editorial boards. In a recent blog entry for CBS, el-Erian said that Friday’s European compromise was “necessary, but not sufficient.”
“Yet another golden opportunity was insufficiently exploited by European policymakers,” el-Erian wrote for CBS.
While the accord and a meeting of the European Central bank “produced important results,” he said that “given the scale and scope of the European crisis, they are not enough.”
In el-Erian’s eyes, Euro zone problems won’t be resolved by fiscal austerity. This is especially true for the southern European countries that need serious growth to overcome their deficits. He also said that Britain’s refusal to take part in the new treaty is the first sign of danger. It alerts that European public opinion is not in favor of the sacrifices demanded by Euro zone reformers and indicates that Euro zone politicians may have real trouble getting their publics to accept these measures.
As a result, el-Erian said that international investors would be left watching and worrying about Europe.
Americans, for their part, are already eyeing the Euro zone apprehensively.
