Abstract: The pretense that the European Union is successful and stable—and that the euro is a successful and stable currency—has been exploded by events surrounding the financial bailout of Greece. No one knows where the contagion will spread or how it may end. The world’s financial markets have occasionally teetered on the edge of panic. But the full implications of what has gone wrong still need to be grasped by euro-zone countries, European countries outside the zone, and the United States. The global lessons to be learned are both political and economic; they relate especially to the danger of allowing politics to prevail over economics, as has happened repeatedly in Europe. The crisis in the euro zone goes to the heart of the European project itself. That project needs to be rethought, and European institutions and arrangements need to be remodeled. America, which for decades urged European countries (including Britain) to create a Union that has turned out to be the opposite of what was hoped, has an interest in this. Today, America has only limited power to help put the difficulties right, but it can and should offer advice before events once again spiral out of control. It should also watch where it is going.
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Dr. Robin Harris served during the 1980s as an adviser at the United Kingdom Treasury and Home Office, as Director of the Conservative Party Research Department, and as a member of Prime Minister Margaret Thatcher’s Downing Street Policy Unit. He continued to advise Lady Thatcher after she left office and has edited the definitive volume of her Collected Speeches. Dr. Harris is now an author and journalist. His books include Dubrovnik: A History (Saqi Books, 2003); Beyond Friendship: The Future of Anglo–American Relations (The Heritage Foundation, 2006); and Talleyrand: Betrayer and Saviour of France (John Murray, 2007).
The author wishes to thank J. D. Foster of the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation for advice on this paper and Erica Munkwitz of the Margaret Thatcher Center for Freedom at The Heritage Foundation for help with the research.