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Europe's Crisis May Put Politicians Out Of Work


This is WEEKEND EDITION from NPR News. I'm Scott Simon.

Europe's financial crisis has put many people out of work - even some politicians. The government of the Netherlands fell last weekend, after failing to reach an agreement on a new austerity budget. And the first round of voting in France's presidential election has put President Nicholas Sarkozy on the ropes. His Socialist opponent, Francois Hollande, emphasizes growth over budget cutting. So will Greece, Spain, and Portugal continue with their austerity budgets if core European countries, such as France and the Netherlands, get new governments? And what are the implications for the United States in an election year?

David Rothkopf joins us. He's the CEO and editor-at-large of Foreign Policy. In his latest column for the Foreign Policy website, he writes about the state of Europe's long financial crisis.

Thanks for being with us.

DAVID ROTHKOPF: It's my pleasure to be here.

SIMON: So is the class of political leaders whose faces we see in the photographs at summit meetings, on the verge of being driven out of office because of the steps they've taken in this economic crisis?

ROTHKOPF: I think a number of them are. I think that this is just the first wave of these kind of reactions. Some of the leaders now in Spain and in Italy who are going to be forced to implement austerity plans are going to fine that has the teeth start digging in of those austerity plans, people will take to the street. They will push back and governments will fall. If they want to keep this European monetary experiment functioning, they're going to have to find a balance between austerity and some kind of social awareness for the people who are being hurt by this downturn.

And so, adjustments are going to have to take place. And it's like what we've seen here in the United States, you've got to walk a fine line. You know, we have to deal with our fiscal crisis, but we also have to deal with our growth concerns. And this is the problem that's being faced across the developed world now - Japan, the United States and now Europe.

SIMON: Let me try and be the voice of a German banker for the moment. They have argued - and not just German banks or U.S. banks, for that matter - that in the end this is not a matter of democracy, it's a matter of debt, and it has to be paid back, and there is no sensible economic recovery without paying back that debt. You don't vote on it anymore than you get a vote on your credit card bill.

ROTHKOPF: Well, bankers say this every time there is a debt crisis but the unwavering rule of debt crises is when somebody who owes money can't pay, they don't pay and somebody has got to take a haircut. You know, either the banks are going to get back less or they're going to get it back slower or somebody's going to have to step up and lend some bridge financing. But the German notion, which is that they can force austerity and then everybody can wait for a knight on a white horse to come over the horizon in the form of cyclical growth so that that's going to lift all boats and that's going to make it possible to deal with this debt, it's just not sustainable, it's not realistic. And last week at the IMF World Bank meetings here in Washington, the head of the IMF, the top officials of the U.S. government were deeply frustrated in behind-the-scenes discussions with the Germans as they try to get this message through to them.

SIMON: Well, what are some of the implications for the United States in an election year?

ROTHKOPF: Well, they're grave. I think in the White House right now, their eyes are more firmly fixed on the European economy almost than the U.S. economies, is because it's so precarious. A big downturn in Europe would be very bad for the Obama administration. Worse would be some kind of a shock, either a big market downturn, or - imagine what would happen if a big European Bank failed and that led to Morgan Stanley or Bank of America or some other bank fail and they go to Washington and they say, bail us out. Do you think Washington is in the mood to bail another bank out? I don't.

SIMON: David Rothkopf, CEO and editor-at-large of Foreign Policy magazine. His latest book is called, "Power, Inc."

Thanks so much.

ROTHKOPF: My pleasure. Transcript provided by NPR, Copyright NPR.