Managing Europe’s Perfect Storm

NEW YORK – The Chinese often point out that in their language the character for crisis and opportunity are one and the same. But, while it is indeed true that crisis and opportunity often go hand in hand, it is difficult to see much opportunity in Europe’s current circumstances.

One reason the current situation facing Europe is so difficult is that it was so unexpected. Here we are, 70 years after the end of World War II, a quarter-century after the end of the Cold War, and some two decades after the Balkan wars, and suddenly Europe’s political, economic, and strategic future seems much more uncertain than anyone predicted as recently as a year ago.

Another reason to be worried is that Europe faces not one crisis, but several. The first is economic: not just the current reality of slow growth, but the prospect that slow growth will continue without respite, owing above all to policies that often discourage businesses from investing and hiring. The rise of populist political parties of both the left and the right across the continent attests to popular frustrations and fears.

Making matters worse for Europe’s economy was the decision taken decades back to introduce a common currency without a common fiscal policy. Discipline disappeared at the national level in many countries; Greece was the most recent casualty, but it is unlikely to be the last.