Hampson: Can Lagarde and the IMF save the Euro?

By:
Fen Osler Hampson
/
4 July, 2011
By: Fen Osler Hampson
Director of the Global Security program and Distinguished Fellow at CIGI and Chancellor's Professor at Carleton University

It is not up to Mme. Lagarde and the IMF to save Europe. Europe has to save itself by addressing two critical issues: (1)sovereign debt in the Mediterranean countries (Greece, Italy, Spain and Portugal), which is the result of a bloated welfare state, excessive regulation, tax evasion, and chronic government deficits; and (2) the European Union’s own internal structural imbalances caused by Germany’s export driven model of growth which depends on unsustainable import demand by its European partners. German consumers will have to spend more. The Mediterranean countries will have spend less and become competitive. Lagarde will have to tread carefully and not appear to play favorites, especially when it comes to French creditors who are biggest holders of Greek (junk) bonds.

Before you click away, we’d like to ask you for a favour … 

Open Canada is published by the Canadian International Council, but that’s only the beginning of what the CIC does. Through its research and live events hosted by its 18 branches across the country, the CIC is dedicated to engaging Canadians from all walks of life in an ongoing conversation about Canada’s place in the world.

By becoming a member, you’ll be joining a community of Canadians who seek to shape Canada’s role in the world, and you’ll help Open Canada continue to publish thoughtful and provocative reporting and analysis.

Join us