The Greek Debt Crisis as Asymmetric Economic Warfare

In answer to an inquiry from a reader, my take on the Greece crisis is that the politics vs. economics dilemma is pretty thorny for everyone involved. (See Nicolas Nagle’s WPR briefing today for a great background on that.) But the stakes are too high to let Greece or the euro fail, and so eventually, everyone is going to have to bite at least part of the bullet to seal a deal. Everything going on right now is brinksmanship, with everyone trying to get the best deal possible for their particular interests.

But a neglected part of the story here has to do with states and non-state actors — in this case, the financial institutions that have essentially targeted Greece and the euro in the hopes of making a bundle in the event they fail. The question is whether nations and groupings of nations are strong enough to face off against predatory financial actors that have only economic and no political interests to defend. In other words, is the political accountability of government too much of a handicap for nation-states to defend themselves against non-state economic actors whose accountability is limited to the bottom line?

That, in turn, raises the question of what regulatory tools are necessary to prevent this kind of attack from reoccurring. In thinking that over, consider this: What would the policy discussion look like today if the attack on Greece and the euro were being conducted, not by apolitical financial actors, but by a non-state actor with a political agenda and/or demands?

Another comparison seems timely, given the recent patch of turbulence in the U.S.-China relationship. What if instead of non-state actors attacking the euro, the storyline was of China’s sovereign wealth fund attacking the dollar?

What’s going on in Greece is not so simple, because there have been a lot of irresponsible actors who have contributed to creating the current mess. But it was facilitated and exacerbated by some shady financial dealings that essentially targeted the currency of our allies. That’s pretty shortsighted strategic thinking, both from a financial and a political point of view.

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