US won’t play deal-maker in Greek drama

The Obama administration is staying on the sidelines of a financial showdown that could upend the world’s financial markets.
 
The situation in Greece took a significant uncertain step Sunday, when the nation’s voters rejected a new bailout plan that would have provided a fresh round of financial support from the European Union, but with additional austerity measures attached.
 
Faced with an economic saga that could upend Europe’s economic union and throw financial markets into disarray, U.S. officials are largely stuck watching the drama play out from across the Atlantic.
 
White House press secretary Josh Earnest said Monday that Greek and European leaders should continue working toward some sort of compromise, while noting the “significant differences” still separating the two.
 
But beyond that urging, there appears to be little role for the U.S. in the matter.
 
“Ultimately, it will be the responsibility of the Europeans to resolve it,” Earnest told reporters.
 
More than 60 percent of Greek voters decided to turn down the package, which government officials also opposed. The surprise verdict left European leaders without a plan, as the odds of Greece making an unprecedented exit from the euro zone climbed.
 
Greek bank officials decided to keep the nation’s banks closed until at least Wednesday to prevent potential bank runs, and the European Central Bank announced Monday it would not be increasing its emergency credit to the nation, placing additional pressure on Greece’s ailing finances.
 
But amid the turmoil overseas, the United States has been left largely on the periphery, serving at best an advisory role to international leaders searching for some sort of compromise.
 
Obama administration officials have maintained open lines of communication with counterparts abroad, but there appears to be little more to do than that.
 
Greece’s finance minister, Yanis Varoufakis, abruptly resigned Monday after the referendum results were tallied. The sometimes confrontational official was a harsh critic of austerity measures pushed by European officials, particularly Germany.
 
Greek Prime Minister Alexis Tsipras tapped Euclid Tsakalotos, a long-time adviser leading cross-border debt talks, to replace him.
 
But early indications were that international officials were still trying to figure out their next move after Greek voters cast aside their previous offer.
 
“The IMF has taken note of yesterday’s referendum held in Greece. We are monitoring the situation closely and stand ready to assist Greece if requested to do so,” said Christine Lagarde, managing director of the International Monetary Fund, a major Greek creditor.
 
European officials have indicated it falls to Greece to make the next move after rejecting the previous plan.
 
The Obama administration has repeatedly emphasized that the U.S. has limited direct economic ties to Greece, so any meltdown there should have a limited impact on the U.S. economy.
 
But experts and analysts are less worried about the direct impact of Greek struggles on the global economy than they are about the unpredictable and unprecedented state of affairs injecting fresh doubt into global financial markets.
 
If fears over Greek debt begin to spread to other less financially sound European nations, like Spain and Portugal, there is a concern that contagion effect could set off a broad financial crisis and send markets tumbling, which would be felt in the U.S.
 
So far, markets have largely kept matters in check, with the Dow ending the first day of trading since the Greek referendum down just 47 points.
 
New Jersey Gov. Chris Christie (R), one of several GOP presidential candidates, downplayed Greek concerns Monday amid the new developments, barring a broader meltdown.
 
“I don’t think it’s going to be a significant impact on the U.S. economy,” he said on CBS’s “This Morning.” “But if it looks like it’s leading to a crumbling [European Union], then it may have some more impact.”
 
The political storm surrounding Greek’s troubles has led to little more than a few ripples in the United States, as politicians primarily used the country’s plight to push their preferred plan for the U.S.
 
Sen. Bernie Sanders (I-Vt.), who is running a liberal presidential campaign aimed squarely at economic inequality, praised Greek voters for tossing out the austerity package in a Sunday statement.
 
“In a world of massive wealth and income inequality Europe must support Greece’s efforts to build an economy which creates more jobs and income, not more unemployment and suffering,” he said.
 
Meanwhile, Republicans have pointed to Greece’s woes as a warning sign, arguing the U.S. could face similar challenges if it fails to rein in its own finances.
 
“If you want a peek into our future with Hillary Clinton or Bernie Sanders, then look at what’s happening in Greece today,” tweeted Louisiana Gov. Bobby Jindal (R) Monday. “Greece gave us democracy, and now they’re showing us how to kill a democracy.”