"The EU today operates something like the US under the Articles of Confederation, which defined the US’s ineffectual governing structure after independence from Britain in 1781 but prior to the adoption of the Constitution in 1787. Like the newly independent US, the EU today lacks an empowered and effective executive branch capable of confronting the current economic crisis. Instead of robust executive leadership tempered by a strong democratic parliament, committees of national politicians run the show in Europe, in practice sidelining (often brazenly) the European Commission. It is precisely because national politicians attend to national politics, rather than Europe’s broader interests, that the truth about Greece’s debt went unspoken for so long.
The Eurogroup, which comprises the 19 eurozone finance ministers, embodies this destructive dynamic, meeting every few weeks (or even more frequently) to manage Europe’s crisis on the basis of national political prejudices rather than a rational approach to problem-solving. Germany tends to call the shots, of course, but the discordant national politics of many member states has contributed to one debacle after the next. [...]
Amid all this dysfunction, one international institution has remained somewhat above the political fray: the IMF. Its analysis has been by far the most professional and least politicized. Yet even the IMF allowed itself to be played by the Europeans, especially by the Germans, to the detriment of resolving the Greek crisis many years ago. Once upon a time, the US might have pushed through policy changes based on the IMF’s technical analysis. Now, however, the US, the IMF, and the European Commission have all watched from the sidelines as Germany and other national governments have run Greece into the ground.
Europe’s bizarre decision-making structure has allowed domestic German politics to prevail over all other considerations. And that has meant less interest in an honest resolution of the crisis than in avoiding the appearance of being lenient toward Greece. Germany’s leaders might rightly fear that their country will be left holding the bill for European bailouts, but the result has been to sacrifice Greece on the altar of an abstract and unworkable idea: “no bailouts.” Unless some rational compromise is agreed, insistence on that approach will lead only to massive and even more costly defaults."