Europe to Washington: Hurry it up already

Europeans know a thing or two about down-to-the-wire debt deals, but with time running out in Washington to reach an agreement before a catastrophic default that could have devastating spillover effects around the globe, European leaders are sweating.  On Tuesday, Christine Lagarde, the managing director of the International Monetary Fund and former finance minister of ...

AFP/Getty Images
AFP/Getty Images
AFP/Getty Images

Europeans know a thing or two about down-to-the-wire debt deals, but with time running out in Washington to reach an agreement before a catastrophic default that could have devastating spillover effects around the globe, European leaders are sweating.  On Tuesday, Christine Lagarde, the managing director of the International Monetary Fund and former finance minister of France, warned the United States that the issue needed to be "resolved immediately."  Today, she told the PBS NewsHour that there would be dire consequences for the world economy if there wasn't resolution.

There's quite a lot of concern out there. The global economy is clearly highly dependent on the U.S. economy, because the U.S. economy is the first in the world and it's a major power in many respects. So to have the lead economy uncertain about its debt ceiling is quite worrisome.

In a separate interview with Fareed Zakaria on CNN, she said the solution would be to raise the debt ceiling now and address fiscal consolidation issues in the medium term.

Europeans know a thing or two about down-to-the-wire debt deals, but with time running out in Washington to reach an agreement before a catastrophic default that could have devastating spillover effects around the globe, European leaders are sweating.  On Tuesday, Christine Lagarde, the managing director of the International Monetary Fund and former finance minister of France, warned the United States that the issue needed to be "resolved immediately."  Today, she told the PBS NewsHour that there would be dire consequences for the world economy if there wasn’t resolution.

There’s quite a lot of concern out there. The global economy is clearly highly dependent on the U.S. economy, because the U.S. economy is the first in the world and it’s a major power in many respects. So to have the lead economy uncertain about its debt ceiling is quite worrisome.

In a separate interview with Fareed Zakaria on CNN, she said the solution would be to raise the debt ceiling now and address fiscal consolidation issues in the medium term.

Today, the German Finance Minister Wolfgang Schäuble also warned Washington to act.

Everyone in the US should be aware of their responsibility for the global financial markets.

He added, "The core of [the U.S.’s] difficulties is exorbitant debt and the economic prospects. Americans have to find long-term solutions to create solid fiscal and growth policies."

Schäuble and Lagarde were downright tame compared to Vince Cable, Britain’s secretary of state for business, who told the BBC earlier this week that "the biggest threat to the world financial system comes from a few rightwing nutters in the American Congress rather than the euro zone."

Perhaps, the most sobering analysis of all comes from Germany’s Der Spiegel:

Even if the worst is avoided, US finances are still a mess. Total debt is approaching 100 percent of gross domestic product, putting it in the same league as Italy, Portugal and Ireland, three of the euro-zone’s famous PIIGS states. America’s budget deficit is well over a trillion dollars — more than 10 percent of GDP. Were Washington to apply to become a member of the European common currency zone, it would be rejected out of hand.

We’d be rejected by the euro zone? This euro zone?

Robert Zeliger is News Editor of Foreign Policy.

More from Foreign Policy

Russian President Vladimir Putin chairs a commission on military-technical cooperation with foreign states in 2017.
Russian President Vladimir Putin chairs a commission on military-technical cooperation with foreign states in 2017.

What’s the Harm in Talking to Russia? A Lot, Actually.

Diplomacy is neither intrinsically moral nor always strategically wise.

Officers with the Security Service of Ukraine (SBU) wait outside an apartment in Kharkiv oblast, Ukraine.
Officers with the Security Service of Ukraine (SBU) wait outside an apartment in Kharkiv oblast, Ukraine.

Ukraine Has a Secret Resistance Operating Behind Russian Lines

Modern-day Ukrainian partisans are quietly working to undermine the occupation.

German Chancellor Olaf Scholz and French President Emmanuel Macron wave as they visit the landmark Brandenburg Gate illuminated in the colors of the Ukrainian flag in Berlin on May 9, 2022.
German Chancellor Olaf Scholz and French President Emmanuel Macron wave as they visit the landmark Brandenburg Gate illuminated in the colors of the Ukrainian flag in Berlin on May 9, 2022.

The Franco-German Motor Is on Fire

The war in Ukraine has turned Europe’s most powerful countries against each other like hardly ever before.

U.S. President Joe Biden holds a semiconductor during his remarks before signing an executive order on the economy in the State Dining Room of the White House in Washington, D.C.
U.S. President Joe Biden holds a semiconductor during his remarks before signing an executive order on the economy in the State Dining Room of the White House in Washington, D.C.

How the U.S.-Chinese Technology War Is Changing the World

Washington’s crackdown on technology access is creating a new kind of global conflict.