The US is jumping into the battle royal that is shaping up to take place this week between Germany and Greece regarding the Greek debt crisis. Obama could care less about the Greek debt, his concern is losing Greece to his arch enemy, Russia.
The Financial Times is reporting that the Obama administration is actively pushing EU leaders to find a compromise with Athens, as fear grows that a Grexit could not only damage the global economy, but also reshape the geo-politics of the region.
FT makes the case that American and European leaders are deeply concerned that Greece’s exit from the monetary union can lead to a geo-political balance shift that places Greece firmly in the Eurasian camp, alongside Russia and China.
The Greek pivot would undoubtedly lead Cyprus, and perhaps other EU nations, to re-examine the benefits that the EU offers, weighed against the austerity, and on-the-ground misery that Europe’s rule brings.
“We’re not attempting to mediate…we’ve advised all sides there needs to be some compromise on everybody’s part,” a senior US official said.
“There are limits to how much austerity a society can withstand.”
Officials in Brussels have raised concerns about some within the German government who have argued that a Greek exit from the euro is a survivable, though undesirable, outcome.
US officials have long argued such a result could lead to Europe-wide economic upheaval
“We believe that any fragmentation would have a severe spillover effect,” the senior US official said.
Although Washington is not pushing a specific blueprint, the official said continued emphasis on Greek budget-cutting, as opposed to broader economic reform efforts, appears unwarranted — a position echoed by Yanis Varoufakis, the new Greek finance minister.
“They probably don’t need to do an enormous amount of additional fiscal adjustment,” the US official said.
“They need to hold on to the gains from the reforms they’ve already made and they need to press forward with the kind of structural changes that a lot of people believe are needed to make Greece more competitive.”
Obamas’ calls for a resolution comes amid mounting concern in Washington about the hardline stance taken by Germany, who insist that Greece press on with budget-cutting commitments made under its existing €172bn bailout regardless of last month’s election, which brought anti-austerity party Syriza to power .