NEWS

Robert Samuelson on the Greek crisis as seen in the US

In an interview with Kathimerini, Washington Post economics columnist and author Robert Samuelson notes three reasons that make it more likely that Greece will remain in the eurozone. He also expresses his impression that Prime Minister Antonis Samaras is viewed in the US as he is in Europe, as a ?last chance.?

How is the Greek crisis perceived in the United States?

Except for people in the markets, government officials and economists, most Americans don?t pay much attention to the Greek crisis. To the extent they do, they focus mostly on the social unrest, political conflicts and human hardship — and not the financial turmoil or the negotiations with the troika.

How is the Greek prime minister perceived in Washington?

My impression is that Mr Samaras is viewed here in the US as in Europe: a last chance.

What is the sentiment on Wall Street about Greece?

My hunch is that the prevailing view is that, somehow, Greece and the rest of the eurozone will avoid having Greece precipitate a larger euro crisis. In any case the markets are more worried about the fate of the euro than the fate of Greece.

Do you believe Greece will remain in the eurozone?

I think it will stay for several reasons: a) other eurozone members don?t want to precipitate a wider crisis; b) having already endured so much suffering, it seems foolish to exit now; c) there is a good chance that things would be worse if Greece exited and adopted its own currency. There could be a steep devaluation, high inflation and general financial instability. However, whether Greece stays in depends mostly on my first reason stated above: That is, the attitude of other eurozone members, which will — in the end — have to continue providing financing. 

>Why is Washington pushing Germany for a more expansionist policy?

I suspect this is true, though I haven?t seen public evidence of it. Assuming it is, I?d suggest the following explanation: The Obama administration has a general Keynesian tilt — that is, its response to a weak economy is to provide more incentives of one sort or another. In Europe, the one plausible large source of more incentive is Germany, because it is Europe?s largest economy and because its financial situation is relatively strong. In general, American officials fear that, somehow, Europe?s deepening economic and financial crisis may derail the sluggish recovery here.

Some say that the Obama administration has asked Europe not to take anymore game-changing decisions, such as a Greek eurozone exit, before November 6. Is that true?

I hadn?t heard that, and it would be pretty crude. Still, it?s clear (see previous answer) that the administration worries about what Europe might do to undermine Obama?s prospects. So it?s not impossible.