“The United States will always do the right thing – after they have exhausted all other options”. Winston Churchill’s comment about the United States may apply today to the EU.

As efforts continue to sort out the economic mess in Greece, and within the euro zone in general, the search for options has been increasing almost hourly. What was to be a rather grand plan agenda for the G20 meeting in Cannes this week turned out to be another hectic fire drill for Chancellor Merkel and host President Sarkozy. And it is by no means clear whether the fire is out, or if the fire engines even have enough water.

A Spectator Sport
Amidst the European leaders strolling along the beachfront in Cannes was an American President who found himself in a somewhat unique situation at a G20 meeting – more in the audience than on the stage. Obama’s role was a reduced one, lessened to more of a cheer leader this time. Some of that is due to the miserable economic situation he faces at home, as well as the specter of political defeat a year from now. Some of it has to do with the objective inability of the US to offer any substantial assistance to the Europeans – perhaps with the exception of working harder to stabilize an American economy in as much trouble as the Europeans face. The President could not come bearing any gifts, other than encouragement and perhaps some shared lessons, for better and for worse, drawn from the past three years of his own travails. During his press conference in Cannes, the President referred to having gotten a crash course in the European Union’s complicated decision-making process. But the whole unfolding cacophony in Cannes might still have reminded him of having to forge a consensus back home.

It is this peculiar position, in which the President finds himself in Cannes, which underscores the changing role of American power in the world.

American Decline?
The metrics of power are complicated in a globalized world, but by most measures the US remains the dominant force on the globe. With the largest military capabilities and the largest economy, talk of American decline is exactly that − talk. But as the old saying goes, perception is reality, and the perception of American troubles often translate into pictures of a country losing traction.

However, there are real measurements which indicate where the US is facing severe challenges down the road. Its fiscal situation is bad and getting worse, as was reflected in the recent downgrade it received from Standard & Poors. It is seeing serious infrastructural weakness around the country, along with state and local governments short on cash and long on deficits.

There are also growing strains within American society as we argue about what do to about these challenges. The decline in trust in both leaders and institutions is alarming, just as the increase in political vitriol which infects our political dialogue has created echo chambers throughout the country, rewarding demagoguery and, therefore, political stalemate.

Two Sides of the Same Coin
President Obama might be thinking about all this in Cannes and perhaps take some solace that he is not alone in such an environment. The protests and demonstrations on the streets of Athens are stark reminders about what happens when a government loses its credibility. He can see that in the expressions of other European leaders, who face such challenges when it becomes necessary to present hard choices to an increasingly fearful electorate.

One might expect that such shared challenges generate a chance for leaders to realize at once how their choices are codependent and indeed require shared responsibility for shaping the right ones. But the opposite result can occur when leaders revert to seeking their political salvation within the rewards of national politics at the expense of a common cause.

President Obama knows that what the Europeans do in the coming months can have a direct impact on his own prospects at home. The state of the European economy over the next twelve months can determine where the US economic outlook winds up as the President faces reelection. But there is little he can do about how the euro evolves. That is in the hands of Chancellor Merkel and her allies, along with the European Central Bank and their combined ability to find a way out of the current economic maze. And, equally so, the various European leaders know that their own futures are also dependent on factors which they cannot control, as was demonstrated by Greek Prime Minister Papandreou’s decision to call for a national referendum at the beginning of this week.

This degree of interdependence also means vulnerability, a condition which politicians do not want to admit. The continuing evolution of the Europe Union brings with its constraints, strains, but also possibilities.

Sending a Clear Message
European leaders cannot deny the reality of their interdependence, but they also need to be sure that their publics understand it and its consequences. The demonstrations in Athens represent the blow back when that message is not well communicated, received, or even fabricated. Leaders are now on a much shorter political leash when it comes to steering major changes through a society.

To return to Churchill, it may well be that both the Europeans and the Americans remain uncertain about their options and have, therefore, not yet exhausted all of them, for better and for worse, before doing the right thing. But do we really know what the “right thing” is? That will depend on whether we can identify the right problem(s). It will also depend on whether there is enough political will and support to respond to them. And it will depend on seeing results.

Chancellor Merkel and President Sarkozy, along with their European partners, seem to have managed to do the “right thing” by laying down a marker for Greece as a member of the euro zone: Either play by the rules or leave the club. There may have to be many more markers put down as this story continues to unfold in Greece and elsewhere in Europe. Other options may need to be explored in pursuit of “the right thing”. But the important message was this: in the name of our shared interests and responsibilities, we need to define options and set and enforce benchmarks on which we all have to agree. While it involved exhausting other options along the way, it is a step forward for Europe in forging the “right thing”. The measures of success remain to be seen.

During the next twelve months, throughout the debates over “the right thing” in both Europe and the United States, one might think of another Churchill quote: difficulties mastered are opportunities won.