On the eve of the EU Summit, Mark Sheetz offers the following commentary, which differs in some respects from mine. 

In several recent blogs on the euro crisis, Stephen Walt has expressed exasperation with European leaders and pessimism on the fate of the eurozone. His reaction is understandable and consistent with virtually all journalists and economists who study the issue. They are frustrated at the slow pace of European decision-making and the fact that a solution seems obvious. In recent days, demand for action has become nearly hysterical, with analysts, columnists, and editorial writers for the New York Times suggesting that time for a solution is "running short," that "the endgame is fast approaching," that the eurozone is facing a "meltdown," and that a collapse is "perhaps inevitable."

So, what is the solution? Conventional economic wisdom insists that either Germany acquiesce to some sort of bailout or the eurozone is finished. Germany must consent either (a) to the issuance of joint and severally liable Eurobonds or (b) to a policy of monetary easing by the European Central Bank (ECB). The problem is being treated as a technocratic economic matter.  Hence, technocrats have come to power in Greece and Italy. But the matter is essentially political and the crisis turns on central problems of international relations theory, like anarchy, sovereignty, and power.   

Economists believe that the basic problem of the eurozone is economic: that national economic imbalances can no longer be restored through the traditional method of currency devaluation.  But the problems of the eurozone are fundamentally political: (a) it expanded too fast, wider won out over deeper, (b) there is no commitment to common budgetary policies, and (c) there is no mechanism to enforce agreements.

The debate is congealing around two poles, a pessimistic pole predicting the breaking apart of the eurozone versus an optimistic pole of closer integration. The solution includes both. On the one hand, wide economic disparity among members of the eurozone will force weaker members to leave. Greece, as well as those countries that use the euro but cannot afford it (PIGS), will be cast off from the eurozone by a mounting centrifugal force.

On the other hand, the remaining members will converge on tighter economic policy along the German model. As a corollary to more restricted membership, those countries remaining in the eurozone will harmonize their policies regarding deficits and government pensions and achieve some sort of convergence in the major items affecting budget deficits. This will have the effect of bringing Europe closer together, or at least those countries that can achieve convergence. It may also create a more politically coherent Europe, with those remaining in the eurozone leading the European Union economically and politically. Such a situation might even give a common foreign policy the chance to develop and cohere around a small group of stronger European countries.

Some believe that a Greek expulsion from the eurozone will be catastrophic. They assume that a Greek default within the eurozone is manageable, while a Greek exit would make contagion worse. My own feeling is that contagion -- and the accompanying collapse of the European project -- would be the result of Greece staying in the euro, not the result of Greece getting out.  The recent evidence of market contagion to Italy and Spain appears to support this claim. A referendum in Greece would have cleared the air. It would have restored a stark reality that European leaders would not be able to evade. If Greeks had voted "no" on the referendum, Greece would have had little choice but to return to the drachma. That would have been a lesson to others. They would have recognized that they have only two choices: (a) converge fiscal and monetary policies or (b) press the "eject" button. The problem now is that European leaders may still think they can muddle through by patching up a country here and there. That will destroy the clarity exposed by a Greek default.

The divide, as usual, is between France and Germany over monetary policy. The French, along with their southern European allies in Greece, Italy, Spain, and Portugal, favor easy money, while the Germans, along with northern Europeans in the Netherlands, Austria, and Finland, insist on a tight money policy. Any hint of German capitulation to French demands of easier money will be the end of the euro. The first sign of wavering, the first inkling that a compromise is afoot, will signal to the markets that the floodgates for a river of euros are open, that fiscal and monetary discipline are history, that inflation will be rampant, and that the euro will be worthless.

Germans will not pay for the profligacy of their neighbors. Otherwise, where would it stop? Any concession towards easy money will only reinforce the "moral hazard" of further risk-accepting behavior. It is a story as old as Aesop: the ant and the grasshopper. Germany entered into the euro under assurances that all members would conduct their economic affairs responsibly. If this is no longer the case, then Germany will reserve the right to withdraw. A former British chancellor of the exchequer agrees, insisting that Germany would sooner withdraw from the euro than see its integrity compromised. Another (not insignificant) factor is the survival of Angela Merkel as chancellor. Any suggestion of Merkel wavering at the prospect of easy money is tantamount to political suicide. So all the speculation that the ECB or the EFSF will "stabilize" (rescue) the euro is so much folderol.

The power calculus, then, favors Germany. France will be dragged along kicking and screaming, but two points suggest eventual French capitulation. One is that Germany will otherwise threaten to secede from the euro, which would put France in a nasty competitive economic position. And the second is that, without the unity embodied in a common currency, French hopes of ever again exerting influence on the world scene will have evaporated. Europeans understand that they cannot meet global challenges as individual nations because they are no longer great powers. As President Sarkozy conceded, "If Europe does not change quickly enough, global history will be written without Europe."

The original path to the common currency was through a convergence of economic policies. Nations would have budget deficits of no more than 3 percent of GDP, and total debt of no more than 60 percent of GDP. If euro members had stuck to these criteria, they would be in dandy shape now. So a return to that mechanism, with additional penalties for non-compliance, might work. The problem is to create binding agreements.

On the question of enforcement, one possibility mentioned is an automatic increase in taxes to offset a budget deficit beyond acceptable limits. Other devices to ensure compliance with EU oversight of national budgets are available for the same purpose. These sanctions would be imposed by a central authority that can override national budget decisions. The European Court of Justice and the European Commission have been suggested as ultimate arbiters, but such supranational enforcement has its limits in a union of sovereign states.

Sovereign governments may oppose such measures for domestic political reasons. As long as sovereignty remains, national governments may negate previous agreements. Even within national governments, as in the U.S. Congress, existing legislatures may negate the agreements of previous legislatures. Therefore, a more severe penalty is required. 

The ultimate penalty for non-compliance is, of course, expulsion. The eurozone could expel any country that fails -- after a suitable time period -- to adhere to budgetary guidelines set forth in a new agreement. The ultima ratio of economic union is expulsion, just as the ultima ratio of politics is war. It lurks behind every decision as the final alternative.

So the demise of the euro, as a proxy for the EU itself, is not on. Neither is a consolidation on the German federal model. A big push for more Europe is not in the cards now. The loss of that much national sovereignty is unrealistic, given the immature development of a European identity. That is why convergence of fiscal and economic policies is the most likely outcome, not complete structural reform.

But convergence will not save the euro if member states refuse to comply with agreed guidelines. Both France and Germany violated the guidelines in 2003, breaking through the barriers of 3 percent budget deficits and 60 percent debt for more than a year. If the founding members of the eurozone fail to comply or to remedy violations within prescribed time periods, then the euro will well and truly collapse. In a union of sovereign powers, political will is the ultimate arbiter.

Mark S. Sheetz is an Associate in the International Security Program at the John F. Kennedy School of Government of Harvard University. He is currently writing a book on France, Germany, and the Transformation of Europe.  

When my wife and I are asked what we do, we sometime joke that my job is to "think globally," while her job is to "act locally." Translation: in addition to working as a consultant to a number of foundations and think tanks, my wife (Rebecca Stone) is also a member of Brookline's "Town Meeting." A Town Meeting is a venerable New England institution; in our case, it is a 250-person body of elected representatives that debates and approves major town initiatives.  

But sometimes our concerns overlap. A month or so ago, when the Park 51 controversy was stoking the growing fires of xenophobia and nativist prejudice, my response was to write a few blog posts about the issue. Big deal. But she decided to do something more concrete. Specifically, she drafted and sponsored a "warrant article" to be considered and voted upon at the next Town Meeting. Her proposal would amend the town's by-laws and give permanent legal residents ("green card holders") the right to vote in local (i.e., town-wide) elections.

You can read all about it here.

Notice that this proposal is not about giving the right to vote to undocumented aliens, tourists, or temporary visa holders. Nor would it permit green card holders to vote in state-wide or national elections or to run for office. Rather, it is about a single town giving people who are permanent legal residents (the vast majority of whom are taxpayers, including property taxes), the opportunity to participate in local elections only. Most permanent legal residents eventually become naturalized citizens after the requisite waiting period, and permitting them to vote in local elections is also a way to encourage greater civic participation. 

Equally important, it is a way to signal that America remains a country that welcomes people from overseas. It reminds us that we are a country whose very existence, past achievements, and future prospects rest on attracting and integrating future citizens from all over the world. Money quotation:

"A number of legal immigrants pay property taxes and send their children to public schools in Brookline, Stone said, and she believes allowing them to vote in local elections is a way to honor their commitment to the community.

"It may sound schmaltzy, but that's why I did it,'' said Stone, who is also an elected Town Meeting member. "I just got tired of complaining about what everybody else was saying. I figured it's a small thing to do. It's a small gesture. But it's a step in the right direction.''

There are also ample historical precedents for this arrangement. The Constitution is silent on this issue, but the Federal government has long given states and local communities the right to determine suffrage over state and local elections, and over forty different states permitted various forms of local non-citizen voting between 1776 and 1926. Both New York and Chicago have allowed permanent legal residents to vote in local elections as well, as have many other communities.

Massachusetts is a "home rule" state, which means that if the warrant article passes, then the town must petition the State legislature for final approval. Previous petitions from other communities have not been acted upon (if you know anything about the legislature here, that won't surprise you), but a number of other communities are considering similar measures and we may be seeing a turn of the tide. 

In any case, the next time you hear about Newt Gingrich or some other fear-mongering blowhard trying to makes us more suspicious of anyone born elsewhere, be aware that there are other Americans working, in their own communities, to counter such poisonous attitudes. And needless to say, I couldn't be prouder.

Writing earlier this week in the Financial Times, Council on Foreign Relations President Richard Haass made "The Case for Messy Multilateralism."  Haass is almost always sensible, and this piece was too.  His basic argument is that many global issues are increasingly complex, and trying to negotiate big global treaties or pacts (like Kyoto or the Doha Round) are probably beyond anyone's capacity, due to the enormous number of players involved and their widely diverging interests and capacities.  Better to go with more limited agreements (i.e. involving the most powerful or engaged stakeholders), or various "coalitions of the willing."  With luck, this flexible and opportunistic approach will produce a gradual evolution in the world's institutional structure (e.g., from G8 to G20, etc.), and allow us to make progress on issues that might otherwise defy solution.  You know, the best is the enemy of the good, and all that.

Of course, FP readers will recognize that this idea bears a lot of resemblance to Moisés Naím's earlier argument for "minilateralism," and my minor reservations about that concept apply here too.   But one passage in Haass' piece leapt out at me, where he says:

"In many cases it will prove impossible to negotiate international accords that will be approved by national parliaments. Instead, governments would sign up to implementing, as best they can, a series of measures consistent with agreed-upon international norms."

I haven't thought about this notion for very long, but at first read this sounds like a retreat from our usual ideas about democratic accountability, or at least the form that it normally takes here in the United States (i.e., where the Senate has to approve treaties).  In essence, Haass seems to be saying that executives need to make an end-run around constitutional limits, by negotiating informal or tacit measures that don't need to be ratified by legislatures.  I can see the appeal of that idea, I suppose, but despite my concerns about excessive congressional oversight (read: gridlock), I'm at least as worried by the damage that unconstrained executives can do.

Bottom line: this proposal ought to be read in conjunction with James Fallows' Atlantic cover story (which I'm still digesting) on the need for institutional reform here at home.  I've been thinking similar thoughts myself, and I'll share them when they've gelled a bit more.  The Burkean conservative in me says: "don't go there," but I have occasional Jacobin moments too.

P.S.  I'll be traveling over the next week, so posting will be limited by my schedule and by internet availability.  I'm counting on all of you to keep things quiet, ok?

What's the biggest problem facing the world today? Most people would probably say the downward spiral of the global economy. Over at the World Economic Forum in Davos, Steve Schwartzman, chairman of the Blackstone private equity group, said "Forty percent of the world's wealth was destroyed in last five quarters. It is an almost incomprehensible number."  NewsCorp chief Rupert Murdoch warned "the crisis is getting worse” and said that fixing it "will take a long time." 

Former Israeli Prime Minister Benjamin Netanyahu -- whose Likud Party is leading the current polls in Israel -- begs to differ. According to the Associated Press, Netanyahu told the Davos crowd that Iran's nuclear program "ranks far above the global economy as a challenge facing world leaders."

Why? According to Netanyahu, it's because the financial meltdown is reversible if governments and business make the right decisions. But "what is not reversible is the acquisition of nuclear weapons by a fanatical radical regime," he said, adding that "we have never had, since the dawn of the nuclear age, nuclear weapons in hands of such a fanatical regime."

There are plenty of good reasons to try to keep Iran from acquiring nuclear weapons, and it is easy to understand why Israelis are especially concerned about Iran's nuclear program. But Netanyahu's assessment of the relative importance of these two problems is just plain wrong, for at least five reasons.

First, let's be clear about the current state of play. Iran has no nuclear weapons today, and we still don't know for sure if they will ever get them. By contrast, the economic crisis is a reality now. Iran cannot build a bomb today because it has no plutonium or highly-enriched uranium (HEU). Its centrifuges are producing low-enriched uranium (LEU), but you can’t build a bomb with that. In theory it could enrich its LEU to weapons grade, but its LEU stockpile is under IAEA surveillance and the diversion would be detected (this turns out to be something the IAEA is very good at doing). As William Luers, Thomas Pickering, and Jim Walsh note in a sensible article in the latest New York Review of Books, if Iran wants a bomb, its choices "are to cheat and get caught or to kick the inspectors out." Unless Iran has a secret clandestine enrichment program up and running somewhere (which we’ve found no sign of up till now), it’s hard to see the current situation as anywhere near as serious as our economic problems today.

Second, Netayanhu is wrong to say that the world have never seen such a "fanatical regime" with nuclear weapons. Iran's government has many unsavoury qualities, and President Mahmoud Ahmadinejad has said some stupid and offensive things about the Holocaust and about Israel. But "fanatical?" By historic standards Iran's government isn't even in the top rank, and its foreign policy behavior is hardly irrational. Joseph Stalin was an even greater mass murderer than Adolf Hitler, and his successors were ruthless, ideologically-driven men with scant regard for human life. They had a large nuclear arsenal, and yet we managed to wage and win the Cold War against them anyway. Similarly, Mao Zedong was directly responsible for millions of deaths, and he also made a number of shockingly cavalier remarks about nuclear war. Indeed, Secretary of State Dean Rusk once told a Congressional committee that "a country whose behavior is as violent, irascible, unyielding and hostile as that of Communist China is led by leaders whose view of the world and of life itself is unreal." Yet Mao had the bomb and never used it; indeed, Chinese nuclear weapons policy has been quite circumspect for over forty years.

Third, it is remarkably self-centered for Netanyahu to declare Iran's program to be a greater challenge than the global recession. The economic crisis is already harming many millions of people around the world, and it is likely to have an enduring impact on how millions of people -- even billions -- live their lives. It will lower life expectancy, alter life-opportunities, change demographic patterns, and affect the tenor of politics in many places, probably for the worse. Just look at all the social and political ills spawned by the Great Depression and you get some idea what a protracted global recession might do today. Even if Iran did get nuclear weapons someday, that is mostly a regional problem rather than a global one. Iran's neighbors would have legitimate concerns, but does Netanyahu really think that this is a bigger issue than the world economy for the leaders of Brazil, Canada, Indonesia, Norway, Japan, China, Chile, South Africa, or New Zealand?

Fourth, let's not forget that Israel has several hundred nuclear weapons of its own, and Israel's American ally has several thousand of them. If Iran were to acquire a few nuclear weapons someday, it could not use them without triggering its own destruction. Iran's government may support terrorist groups like Islamic Jihad that employ suicide bombers, but Iran's leaders show no signs of being suicidal themselves.

Finally, the more panicked people sound about the prospect of an Iranian arsenal, the more that Iranians might falsely conclude that getting a few bombs might actually give them a lot of leverage. This sort of overheated rhetoric may also convince some Israelis that an Iranian bomb would be an existential threat and convince them to leave, which in turn might give some Iranians an additional reason to pursue that option. Ironically, by portraying a legitimate security concern as an imminent peril, Netanyahu and others of his ilk may in fact be undermining Israel's long-term future.

Netanyahu's remarks may help him win more votes back in Israel, but my guess is that didn't win him much sympathy in Davos. To a sophisticated crowd with a global perspective, I'll bet it sounded like special pleading, which is precisely what it was.

ATTA KENARE/AFP/Getty Images