Jeanne Shaheen is the senior United States Senator from New Hampshire, the first woman United States history to be elected as both a Governor and U.S. Senator. She is the former Director of the Harvard Institute of Politics.
Could you walk us through a few key events that drove us to the point we are today with the European debt crisis? Why should Americans care about this?
I think Americans should care about what’s going on in Europe because it has impact on us. Europe is the biggest economy in the world. The trading relationship between the United States and Europe is the biggest in the world. If we don’t sell our goods and services in Europe it has an impact on us, and we’ve seen what that impact has been as we’ve watched. As we’ve seen concerns about Spain and what’s going on with the interest rate on their bonds, that’s had an impact on our stock market. And vise versa; when we had a debt crisis last year, it had a big impact in Europe as well. There is a connection between our economies and between our countries that is critical to our future and so we should care about what happens in Europe.
Is there anything the U.S. can do to help a positive outcome in Europe? What tools do we have in our tool kit?
I think the President and Secretary Geithner have been very active in providing some insights on what we did when we had our financial meltdown in 2008. But you know, it’s interesting. I chaired a hearing last fall after the crisis really erupted. We had a number of experts talking about what was going on in Europe and how it affects us. One of the questions that I asked each of them was, “What could we do in United States that would help with this crisis?” And every person on the panel said that the most important thing we could do in the United States is to get our own fiscal health in order. So to deal with our debt and deficits, and that will send an important signal not just here in the United States, but around the world and particularly in Europe that this is important to deal with.
What is the United States telling European allies to do?
Well you know, I think as we’ve looked at how the crisis unfolded in Europe, one of the messages for me out of events has been that a one-size-fits-all austerity program has not worked. As we’ve seen in Greece, unemployment has gone up and the economy has really tanked there. So that austerity hasn’t; I don’t think it’s the only answer. So we have got to look both at the growth on the one hand and also putting in place programs that create a structure to make sure the economy is run well. And I think now as people are revisiting the crisis and looking at what’s happened, there is more and more interest in a growth strategy as part of the austerity measures. And even Germany now is more open; Chancellor Merkel is more open to looking at growth as part of that.
And what are the odds of Europeans reaching consensus on something like this. Are you hopeful?
It’s challenging. There are seventeen countries in the euro zone. These countries don’t want to give up their sovereignty, which is what you’re doing when you say, “We need a more integrated banking system” or “We need to look up more oversight and that should be centralized.” That takes away some of the country’s sovereignty. And as we look at the challenges we have in the United States with trying to come up with a solution to our debt and deficits, it’s not surprising that if we haven’t done that yet here in America; that’s seventeen countries who are trying to deal with this crisis and are challenged. But I do think that events have been moving in a positive direction and that there is more and more interest in trying to look at more integration throughout the euro zone.
What are the consequences for both Europe and our own economy as we struggle to regain our economic growth? What are the consequences of not reaching some kind of consensus in the short-term and even in the long-term?
Well they’re significant, as we’ve seen Greece is one of the smallest economies in the euro zone. Yet, the events in Greece have had a huge impact throughout Europe. And the United States has been affected. And if we see concern about those fiscal challenges as they spread to Spain and as we look at Italy — which is one of the two of the larger economies in Europe — then we can expect that it will have even a greater impact here in the United States. It’s had political effect; we’ve seen a number of countries whose political leadership has changed as the result of the crisis. The good news, I think, is that Greece’s recent election was for someone who supported the euro and they seem to be able to. And the process of forming the government is positive, so that’s all good news. But clearly, it’s going to continue to have an effect.
And a lot of people have said if Greece does leave, it puts the whole project in peril Is that a real possibility or is that just people trying to start a fire, or push some kind of solution to the issue?
One of the things that happened in the United States in our financial crisis was that we saw Lehman Brothers fail and then we saw that spread to various other companies. And we’ve seen a repeat of that in Europe. There’s concern that if Greece leaves as they have financial challenges, that then spreads to Spain. We’ve already seen Spain is in some difficulty because their interest rates have increased dramatically on Spanish bonds and borrowing. There’s concern that that will then spread to Italy. And it’s interesting because in all of these cases it’s not the country’s debt that’s the issue. It’s challenges with their banking system, with the contagion that’s going on. So, I think there is hope that as these crises have spread that there’s more pressure on European leaders to come up with a grander solution to deal with the problems, just as here in the United States as we look at our challenges. The more we see the impact of those challenges, the more pressure there is to get a resolution.
From a political perspective, what kind of impact is this crisis having on political leadership? How are the political leaders handling this? What impact does it have on voters?
We’ve seen not just in France, but in Italy, Spain, and Greece; we’ve seen leadership and those governments fall in all of these countries as a result of this crisis. I was interested though, I had a meeting not too long ago with the person who was the new head of the E.U. Parliament. And he was actually optimistic. He felt like there was a commitment to deal with the challenges, and that was going to happen. One of the issues that we’ve seen is that time has not been on our side and a quick dramatic response has been important. Unfortunately, it dragged out longer than I think most people believe is helpful to having a real resolution.
The U.S. announced a new defense strategy in 2012. One of the highlights was this quote-on-quote “Pivot to Asia.” Obviously our European Allies weren’t to happy to hear this. What are your thoughts on that? Are we putting our European allies in the second tier?
No, I don’t think so. And I think that was an over reaction to the real focus of our policy. The fact is Asia, as they’ve become more important in term of their economic impact and their ability to influence events, it’s important not just for America, but also for Europe. I think the point here is that we will pivot together to Asia and look at how we’re impacted and how our relationship with Asia develops over the coming years. But certainly NATO continues to be the strongest alliances in the modern military history. We saw the NATO summit recently, just how important its work is with Libya and with all of the countries who still want to join NATO. So it continues to be very important and our relationship with Europe continues to be preeminent relationship. You know, when there are world events that present an emergency or a crisis, the first people we call are our European partners and that isn’t going to change despite the upcoming role of Asia in the world.
What about new issues? A lot of folks are still skeptical about America’s role in NATO, the fact that we continue to foot the majority of the bill. Is NATO really poised to deal with the future challenges the world faces, and that U.S. faces, whether it be cyber-security, terrorism, etc.?
NATO really is one of the few global organizations that have the ability to reach out all over the world. And there are member states, but there are also developing partnerships in other parts of the world to deal with issues that arise in those areas of the world. Certainly, resources are a challenge for all of us right now. One of the things that NATO has been working on is something called “Smart Defense,” where they are looking at how we can better coordinate use of military equipment. And we’ve seen some real success with that. The Baltic States do an Air Police mission and they’re sharing that. As the result of the NATO summit there were agreements to share efforts in a number of areas. So I think that’s important. I don’t think it should be an excuse for not providing the resources that countries have committed to NATO, but I do think as we all face the fiscal challenges that we’re experiencing, it’s important for us to do better in coordinating our resources.