Jack Lew Tries to Convince Europe to Become Like America

U.S. Treasury Secretary Jack Lew traveled to Europe on April 7 to visit with high-profile European Union financial leaders in an attempt to convince them to cut back on austerity measures and instead focus on growth policies. Mr. Lew will face an uphill battle in convincing his EU counterparts. Why would they change when current policies are getting them what they want?

Mr. Lew met with Mario Draghi, president of the European Central Bank, José Manuel Barroso, president of the European Commission, and Herman Van Rompuy, president of the European Council. These men are the movers and shakers on the Continent. But the real power in Europe is found in Germany, which is why Lew also went to see German Finance Minister Wolfgang Schäuble. Any trip trying to convince Europe to change its ways that didn’t include Germany would be doomed to fail.

Mr. Lew went to Europe because of the threat the European crisis has on the international community, and more specifically for Mr. Lew, the effect on U.S. trade with Europe. One senior U.S. Treasury official said the eurozone crisis reduced global growth by three tenths of a percentage point last year. The meetings were also to include discussion of the free trade agreement. Mr. Lew was visiting Europe to gather support for what the Obama government believes is the best way to pull Europe out of its current predicament.

Standing in the way of Mr. Lew’s growth policy, which could be better described as a borrow-and-print-more-money-to-spend policy, are several of Europe’s most powerful policymakers.

Mr. Lew met with ecb President Mario Draghi on the second day of his trip in an attempt to convince him to do a complete reversal on the policies and precepts he has laid down in recent weeks. That has got to be a tough sell. It was Draghi who destroyed Cyprus’s banking industry by forcing it to comply with the strict German bailout terms. He told Cyprus to confiscate bank deposits or else it would be cut off from funds from the European Central Bank—which would have resulted in an immediate and total banking collapse.

The U.S. treasury secretary also tried to convince José Manuel Barroso of his reform ideas. An accomplishable task? Look at what Mr. Barroso has been saying recently. On Sept. 1, 2012, he told the convention of Supreme Court judges in The Hague, “The crisis has made it clear that we must not only complete the economic and monetary union, but also pursue economic integration and deeper political and democratic union withappropriate mechanisms of accountability” (emphasis added).

We found out what those mechanisms of accountability were when, in order to secure a bailout package, Cyprus had to take money from its citizens, shut down its banks and submit to becoming a vassal state of Germany!

After meeting with Mr. Lew, the president of European Council, Herman Van Rompuy, released a statement saying, “EU heads of state or government in March agreed that the only way out of the crisis is to keep tackling its root causes.” A root cause being too much spending and not enough saving.

And then there are others who don’t necessarily want Europe out of its current predicament—at least not yet.

Germany has shown little willingness to ease the burdens placed on austerity-enslaved nations such as Greece and Cyprus. Mr. Lew visited Finance Minister Wolfgang Schäuble to try to convince Germany to pick up the pace in leading the EU out of economic trouble.

There is a reason for German hostility to U.S. recommendations. Some German politicians see the United States as the reason for their current financial burdens. America’s decisions to let Lehman Brothers fail in 2008 ricocheted to the European markets, where local banks and retail investors were hit hard. America’s 2008 financial crisis is what set off Europe’s financial crisis.

But perhaps the biggest reason Germans are reluctant to change their current economic policy is the power the current policy brings them. The recent bailout deal with Cyprus has essentially brought the small island nation under the complete control of Germany. In return for a bailout, Cyprus had to destroy one of the key pillars holding up its prosperity, its financial sector. And now, without its banking sector, Cyprus needs German money more than ever. Dito Greece, Spain, Portugal, Slovenia, Bulgaria and Hungary.

The truth is that the current euro crisis is being used to drive European integration. This is a crisis that EU leaders will not let go to waste. It is allowing them to break taboos to drive forward on the path to a unified European government.

Washington is either incredibly confident in the persuasive abilities of Mr. Lew, or is blind to the fact that many leaders in Europe believe in their current policies and want to see the status quo remain—at least for now.

As time goes on, don’t expect the European elites to take on an American approach to solving their economic problems. As the Trumpet has warned in the context of Bible prophecy, Germany will continue to grow in power. Germany has twice before risen in Europe through World War i and World War ii. This time it is overrunning Europe, not with military power, but through economic means. There is no need for Germany to change its economic policies.