Hearing of the Europe and Eurasia Subcommittee of the House of the Foreign Affairs Committee - "The Eurozone Crisis: Destabilizing the Global Economy"

Statement

Thank you, Chairman Burton, for scheduling this timely hearing on the Eurozone crisis and its
effects on the global economy.

The transatlantic trade relationship is the largest in the world and it is in our interest to make sure that this works to the benefit of the estimated 15 million jobs that are generated from this relationship on both sides of the Atlantic.

I agree with the Chairman that it is important for us to get an accurate perception of US exposure to the Eurozone crisis. But I think it is just as important to look forward, and examine how we can transition from this situation, where the Eurozone is under immense pressure, to a situation where growth is generated and jobs are created from our mutual trade and investments.

The financial crisis has exposed serious structural shortcomings in the mechanisms governing the Euro project and tested European unity. I find it relevant to note that while it has not been beautiful to look at, European leaders do appear to have the resources, capacity and political will to deal with the challenges they face.

Yesterday, European leaders reached an agreement with banks to take a 50 percent loss on the value of their Greek debt and expanding their capital reserves. There was also agreement to expand the European Financial Stability Facility to approximately $1.4 trillion. I hope that these measures will allow Europe to move forward.

I think it is important for us to acknowledge that there are different reasons for the Eurozone problems. I suspect that we are committing an analytical error by discussing one Eurozone crisis, as opposed to a Greek fiscal crisis, an Irish banking crisis and a Portuguese competitiveness crisis. Are we throwing ourselves off track by cobbling these issues together and looking for single causes, symptoms and solutions? I hope our panel can give us a detailed perspective on that.

Some of the commentary I have read recently seems more like Schadenfreude, the German expression for taking delight in others bad fortune, than actual analysis. We can probably agree that the Euro came into existence prematurely and without the requisite institutional oversight, but it seems to me that we may have lost sight of the advantages that the Euro offers entirely during the last couple of years.

I would point to price transparency and stability, elimination of exchange rate fluctuations, fees and transaction costs, increased cross-border trade, market expansion and lower interest rates, and ask our panelists to evaluate whether these benefits no longer outweigh the disadvantages that are more obvious today than they were in the past.

Estonia just joined earlier this year and as far as I am aware, others are still lining up to qualify.

What should we make of this fact? Is there a scenario under which the Euro emerges from the current situation in a stronger, leaner and meaner form?

I believe that it is important to know the details about how problems arose in the Eurozone in order for us to avoid them in the future, but ultimately, I think the biggest question is how do we find opportunities to ensure growth and job creation together with the Europeans?

Thank you, I yield back.

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