by Joshua Foust and Iveta Cherneva
The nexus between security and financial stability means the next security trap could happen at home
The NATO block has been a beacon of economic and social prosperity for decades. Now, however, the region is headed toward yet another financial crisis – and with it comes a whole set of security challenges driven by financial uncertainty and social dissatisfaction.
NATO’s next security and unrest threat will be economic and social, and will come from within.
The Greece debacle
The links between sustainable finance and security are multiple. One should look no further than the recent Greek situation. News of financial meltdown has been peppered with stories of violent and destructive street protests – and even a citizen shooting a fellow Greek over being fired.
The Greek financial crisis grew roots on the turf of unsustainable financial governance practices, and this has had an effect on societal cohesion and the security situation in the country.
A default in Greece creates a substantial degree of economic uncertainty. If Greece simply decides to repay its debt too slowly, that would cause investors to raise the cost of borrowing for other debt-challenged European states – possibly creating similar defaults in Ireland, Spain, and Portugal.
The global security consequences
While a Greek default would obviously have an adverse effect on Europe, it also has global consequences. The American and Canadian economies are tightly intertwined with Europe’s – with trade and other exchange worth hundreds of billions of dollars per year. There are at best only rough estimates of the number of credit-default swaps betting that Greece will default – meaning that a default would incur substantial costs to lending institutions. The catastrophic recession from this collapse would reach the United States and probably spark another downturn across the pond.
Austerity measures in other parts of Europe, like those imposed in Greece, also pose the potential of further unrest. Simultaneously, the moral hazard of a bailout might prevent any of the debt-challenged countries from making the structural changes needed to prevent future defaults – furthering deepening the widespread sense of uncertainty about the future.
Economic uncertainty also has security spending effects. A climate of financial instability and social dissatisfaction prevents governments from effectively protecting populations from external and internal threats – both due to security spending and resource allocation restraints, but also because decision makers’ concerns lie elsewhere in times when they try to resolve financial governance crises.
Secondly, a climate of financial and economic insecurity prevents Europe from playing a vital global security role. Governments that cannot repay their debts do not normally fund alliance, peacekeeping, development, or aid programs – all of which contribute to global stability.
The NATO mission in Afghanistan is anchored by the U.S., but European defense contributions are vital to the mission’s success. Similarly, NATO continues to guarantee stability in Kosovo, and it played an important role in the Libya civil war. A debt crunch would only worsen the stress on all European economies, making future peace-making coalitions less likely – and also implying that future crises would be more likely to spiral out of control.
From a non-military perspective, too, there is a great deal of synergy between American and European development and aid programs. Different countries often specialize in different areas – seen most visibly in Afghanistan, where different NATO countries took responsibility for different aspects of the reconstruction mission, but also in other states as well. In Yemen, the UK’s Department for International Development, USAID, and Germany’s GIZ all focus on different aspects of that country’s many problems, and play different, positive roles in trying to address critical problems there.
If the European economic crisis sparks continent-wide austerity and even a sharp pullback from these sorts of aid missions, the rest of the planet will suffer the consequences.
Finally, the economic crisis has created sharp divisions between European states – yet another form of political and security risk.
The migration of workers within Europe – normally an easy indicator of which European countries are considered most prosperous – has changed dramatically. Over the past months, workers from Ireland and South European countries, such as Portugal, Spain and Greece have begun immigrating not to other parts of Europe but to destinations such as Brazil, Australia and Angola, which they now perceive as better for employment opportunities.
NATO countries are no longer exempt from the concerns that economically less fortunate countries usually experience. Those concerns are deepening, not narrowing, the gulf between different European countries’ economies.
A critical opportunity
The world cannot afford Europe forfeiting its security and economic role. If the debt crisis continues to worsen, that might happen. The next generation of leaders has a critical opportunity to keep international obligations – the NATO alliance, as well as developmental and aid commitments by the region – at the forefront of policymaking. To avoid the next security trap, NATO will have to look within.
Joshua Foust and Iveta Cherneva are both members of the Young Atlanticist Working Group at the Atlantic Council in Washington DC.