Europe’s woes and Obama’s reelection
Andrew Sullivan and Ezra Klein are in emphatic agreement that Europe poses the most serious threat to President Obama’s reelection campaign. But they both seem to insist that a European meltdown would be a devastating stroke of bad luck–an economic sucker punch at a very inopportune moment. It’s just not so. The Obama administration has ...
Andrew Sullivan and Ezra Klein are in emphatic agreement that Europe poses the most serious threat to President Obama's reelection campaign. But they both seem to insist that a European meltdown would be a devastating stroke of bad luck--an economic sucker punch at a very inopportune moment. It's just not so.
Andrew Sullivan and Ezra Klein are in emphatic agreement that Europe poses the most serious threat to President Obama’s reelection campaign. But they both seem to insist that a European meltdown would be a devastating stroke of bad luck–an economic sucker punch at a very inopportune moment. It’s just not so.
The Obama administration has made a conscious decision not to lead an international response to the Euro crisis. It has essentially rejected the notion of contributing more to the International Monetary Fund for that purpose and has been cool to broader efforts to organize an international firewall. As I tried to argue last month, there is an alternative:
[An IMF firewall] is a non-starter in large part because the administration has not started making the argument. It has plenty of ammunition to make a compelling case. Funds to the IMF are not budget outlays in the normal sense, so they wouldn’t blow a hole in the deficit. IMF loans have always been repaid, with interest. A massive, market-calming IMF package for Europe could come equipped with tough conditions to ensure that the euro ceases to be a financial weapon of mass destruction.
What’s more, the administration would not have to provide the bulk of the resources needed for an impregnable defense. European central banks have already committed to contributing several hundred billion dollars to the IMF. China, Brazil, Russia, and other emerging economies with large cash reserves have also signaled a general willingness to contribute. But the Obama administration’s unwillingness to consider any new U.S. contribution has hobbled its ability to lead an international response.
The administration’s calculation is that championing a Eurozone response would be awful election year politics. They’re no doubt right. But the strong political headwinds do not mean that the administration isn’t making a choice. And much more is at stake in that choice than just the president’s reelection fortunes.
David Bosco is a professor at Indiana University’s Hamilton Lugar School of Global and International Studies. He is the author of The Poseidon Project: The Struggle to Govern the World’s Oceans. Twitter: @multilateralist
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