It's Greek to me

I'm in Athens at the moment, attending an Economist conference on "What is Shaping the Global Agenda?" My task, in case you're curious, was to offer an American perspective on the global foreign policy agenda, in fifteen minutes or less. I focused on four issues: climate change, the changing balance of power, Israel-Palestine, and global nuclear security. I may not have offered many bold new insights, but at least I didn't exceed the time limit. And if you want to know the basic line I took, read this.

Not surprisingly, the big topic in most of the conversations (and many of the sessions) is the Greek financial crisis and its broader implications. There's been a pretty clear consensus from the people here that I've talked with (most of them from the business community): 1) yes, there will be a bailout, 2) it will probably work; 3) Greece's situation is mostly of its own doing (poor investment choices, ineffective tax system, padded public budgets, fatal combination of persistent deficits and falling competitiveness, etc.) and 4) the whole mess raises big questions about the EU.

I am hardly an expert on financial markets (though like a lot of other Americans, I've gotten more interested in them since 2008!) so I have no great wisdom to impart on the origins of Greece's troubles or the specific nature of the rescue package that is now being assembled.  But it seems to me that this crisis is a serious body blow to the European Union itself. The EU can point to plenty of successes over the years, but the combination of continued expansion and the creation of a common currency back in 1995 now looks like an exercise in hubris. 

The central problem, as plenty of people pointed out, is that EU didn't create the right institutional machinery when it created a unified currency. Once states give up their own currencies, they can't deal with financial or fiscal crises by devaluation. With that flexibility lost, the EU needed far more centralized economic authority (e.g., a true European central bank and a centralized European tax system) to make things work properly. As one banker told me here, it would be no problem if Europe were really one country and Greece was just a poorer province. But Europe's member states refuse to give up those powers, and so the stability of the euro rested on the naive assumption that all the member states would follow the rules and stay within certain fiscal targets.  This was like assuming that it would never rain, or that at least everyone would always be carrying their own umbrella. Or as one European academic recently put it: European monetary union was "not ready for bad weather."

Indeed, as Steven Erlanger points out here, it's been a pretty tough couple of years for the EU. It didn't cover itself with glory in response to the 2008 recession, and the EU had no mechanism for dealing the volcanic eruption in Iceland that snarled air traffic all over Europe. Instead, what we got was a confused array of poorly-coordinated national policies.  And then Greece had to turn to the IMF rather than its European partners to arrange a proper restructuring program.

Among other things, these events cast further doubt on the possibility that Europe will ever speak with one voice on foreign policy. By creating a president of the European Council and a High Representative for the Union of Foreign Affairs and Security Policy, the Lisbon Treaty of 2007 was supposed to be a step in that direction. In reality, however, foreign policy (including economic policy) remains primarily the prerogative of national leaders, with all the potential for division and delay that this implies.

There are in theory two ways that the EU could go in response to these events. One possibility is that these recent failures will eventually prompt a further expansion of all-European institutions.  This view is the modern version of old-style functionalism: if Europe needs certain institutions to work properly, it will eventually create them. 

The second possibility-which I'd deem more likely -- is that we have in fact seen the high-water mark of the EU project.  Nationalism is still alive and well in Europe, the Cold War is over and there is thus less need for unity against an external threat, Germany is gradually shedding its post-World War II reticence, and the consequences of over-expansion and excessive ambition have been fully exposed. I'm not saying the Union is headed for the dust-heap of history or anything like that (no bureaucracy goes out of business that quickly, especially when there are thousands of pages of laws involved), but a significant consolidation of power in the near future seems most unlikely.

Given that the EU Union has been one of the more interesting political experiments in recent decades, this is going to be fascinating to watch. Time for IR theorists to place their bets?


Stephen M. Walt

A question for Aaron Miller

If you're feeling cheerful these days and would like to be brought down to earth, go read about the Greek financial crisis. Or you could read Aaron David Miller's essay in the current FP. It is a disheartening read on several levels: Miller is in effect saying that the peace process is dead, yet his analysis also unintentionally illustrates the myopia that has doomed U.S. efforts for twenty years or more.

Miller is by all accounts a decent and fair-minded individual and a dedicated public servant.  I've had a few interchanges with him over the past few years and have found him to be both thoughtful and genuinely on the side of peace. But while I share his pessimism about the future, his account of our current situation is rife with blind spots and contradictions. And it is strangely silent on the most telling question of all: What will we do when "two states for two peoples" is no longer possible and everybody is forced to admit it?

Miller's main message is that the United States simply lacks the capacity to advance the peace process at present. Give up the "peace process religion" he suggests, it just ain't gonna happen. He offers a familiar laundry list of obstacles (divisions among the Palestinians, the dysfunctional nature of Israeli politics, the absence of strong leaders, other regional issues looming larger, the United States is now chastened by its difficulties in Iraq and Afghanistan, etc.). But none of these elements explain why the United States cannot exercise the enormous potential leverage that it has over the relevant parties.

Miller admits that "domestic politics" (i.e., the Israel lobby) constrains what the U.S. government can do on these issues, but he insists that the lobby "does not have a veto over U.S. foreign policy."  Yet in the very next paragraph, he writes "we've lost the capacity to be independent of Israel, to be honest with it when it does things we don't like, to impose accountability, and to adopt positions in a negotiation that it might depart from Israel's."  Gee, how come? Sounds a lot like a veto to me. And if you read the fawning speech that National Secuity Advisor James Jones gave at WINEP last week, it's clear that Obama & Co. believe that it is still politic to appease the lobby whenever they can.

Moreover, for all his pessimism about the future, Miller never asks if the United States should distance itself from an Israel that is in the process of becoming an apartheid state. Instead, he still believes "America is Israel's best friend and must continue to be. Shared values are at the heart of the relationship, and our intimacy with Israel gives use leverage and credibility in peacemaking when we use it properly." 

There are three problems here. First, all that "intimacy" doesn't' seem to be giving us very much leverage these days, and Miller's whole essay is in fact devoted to explaining why continuing to push the peace process is a waste of time. OK, but who cares if we have "leverage" and "credibility" if we're not going to use it? 

Second, being Israel's "best friend" shouldn't mean giving it unconditional support, especially when doing so reinforces Israeli policies (like settlement-building) that threaten U.S. interests and Israel's own long-term future. Being a true friend means telling the truth when a friend's actions are misguided, but as Miller recognizes, our capacity to "be honest" has mostly evaporated.

Third, Miller invokes the familiar mantra of "shared values," but without asking whether the values we share are now diminishing. American values don't include confiscating land from Palestinians, throwing thousands of Palestinians in jail without trial, and carving up the occupied territories with separate roads, a wall, and hundreds of check-points.  America's values are "one person, one vote," but that's not the reality in Greater Israel today and that is certainly not what Bibi Netanyahu has in mind for the future. Miller doesn't think the peace process has any future -- and he may be right -- but he still believes the United States should give Israel several billion dollars each year in economic and military aid and provide it with consistent diplomatic protection, even in the face of events like the Gaza War or the pummeling of Lebanon in 2006. 

Perhaps the most disheartening aspect of Miller's cri de coeur is its silence about the future.  The situation is not static, and if there is no peace process, there will be no two-state solution. As both Ehud Barak and Ehud Olmert have warned, if there is no two-state solution, then Israel will be an apartheid state and it will face growing international censure and an internal struggle for Palestinian political rights. When that happens, Olmert noted in 2007, "the state of Israel is finished." 

Reading Miller's essay, I could not help but think of Great Britain. The British did a masterful job of screwing things up in Palestine between 1919 and 1947, and then they decided the whole business was "too hard" and washed their hands of the matter. Miller is understandably unhappy with the track record of U.S. peacemaking efforts, and he is in effect throwing up his hands as well. I can understand his reaction and even sympathize with his feelings, but it's not going to make things any better. In fact, the situation is likely to get worse, and history will judge us harshly for our contribution to it. Telling President Obama to stand aside now is irresponsible advice, because we are a central player in this conflict so long as the "special relationship" continues. Standing aside now also guarantees a worse outcome for all concerned.

So here's the question I'd really like Miller to address: if it becomes clear that "two states for two peoples" is no longer an option, what does he think U.S. policy should be?  Should we then favor the ethnic cleansing of several million Palestinian Arabs from their ancestral homes, so that Israel can remain a democratic and Jewish state? (By the way, that would be a crime against humanity by any standard.) Or should we then press Israel to grant the Palestinians full political rights, consistent with America's own "melting-pot" traditions? (That is the end of the Zionist vision, and may be unworkable for other reasons). Or should we back (and subsidize) their confinement in a few disconnected enclaves (in Gaza, around Ramallah, and one or two other areas in the West Bank), with Israel controlling the borders, airspace, and water resources? (This is the apartheid solution, and it's where we are headed now.) I fear that some future president will have to choose between these three options, and it would be interesting to know what an experienced Middle East negotiator like Miller would advise him or her to do then.