Afghanistan and the Greek financial crisis are high up on the Ambassador's agenda–right next to health care reform in the US. As a "translator" of American domestic and foreign policy, Philip D. Murphy explains how things look from an American perspective. (Jiffer de Bourguignon, freelance author from Hamburg talked to Ambassador Murphy for Amerika Haus NRW.)

JB: Secretary of Defense Gates ruffled feathers when he spoke his mind during a meeting of NATO's top political and military chiefs in Washington in late February. He said, "These budget limitations relate to a larger cultural and political trend affecting the alliance. One of the triumphs of the last century was the pacification of Europe after ages of warfare. But I believe we have reached an inflection point, where much of the continent has gone too far in the other direction. The demilitarization of Europe - where large swaths of the general public and political class are averse to military force and the risks that go with it - has gone from a blessing in the 20th century to an impediment to achieving the real security and lasting peace in the 21st century. This cannot continue if NATO wants to remain relevant."

Would you comment please.

Amb. Murphy: I really am only qualified to comment on this in the context of Germany.  In my first seven months here I have taken the time to make sure I really understand the Bundeswehr in as in-depth a way as possible.  For instance in January I spent five days in Afghanistan with the Bundeswehr.  I have also spent a significant amount of time at the Ministry of Defense with both military and civilian leaders.  So I have tried to understand this. And I would make two observations. First of all and probably most importantly, my American military colleagues who have worked with the Bundeswehr over the past 10-15 years from Kosovo onward speak of a dramatic and continuing development of Germany’s military capabilities and its willingness to participate with its allies in military missions. My colleagues and I every expectation that trend will continue into the future.

The next point is that what I saw and heard in Afghanistan when I was with the Bundeswehr was extremely impressive. We are deeply appreciative of Germany’s partnership in Afghanistan, now going on nine years.  Germany is a vital partner. The Germans are in command of RC (regional command) North, which means they are in command of American troops and other allies in that area.  The Bundeswehr units I saw were very impressive.  Their capabilities, their professionalism, as well as their mindset and their vision of how they can clear, hold and build the north in Afghanistan – every aspect was very positive.  A famous American football coach used to say, “I only know what I see,” and for me that defines my view of Germany’s willingness and ability to participate in military missions with its allies. I am deeply impressed by what I see – both the progress that has been made and the continued progress that will happen in the future

JB: The recent financial crisis in Greece has made headlines and provoked a strong outpouring of negative opinions from the German public. Chancellor Merkel has been under pressure from her European partners to go along with some sort of financial rescue plan that would protect the common currency. It is a difficult situation for any leader. Do you think Germany should step in and assist?

Amb. Murphy: That is something for Germany to determine for itself.  It is a sovereign decision. But I will make a couple of observations. First of all a strong European Union and certainly a strong Germany and a strong German and European economy are in all our national interests, America’s as well as Europe’s.  So getting Greece on its feet in the right way and ensuring a strong, stable European Union going forward is without a question in our interest.

The Greek situation is very difficult for everybody, most of all the Greeks.  I lived in Asia when the Asian financial crisis started. The tool that was immediately at the disposal of Asia at the time and can be used by countries that are not in a currency union is doing something with one’s currency right away. You typically devaluate it. As a theoretical matter that makes a lot of sense. But the pain that the domestic economy then goes through is not to be underestimated.

But Greece can’t revalue its current currency, the euro.  That is not an option. So therefore, it has to do something with its fiscal policy.  For Greece, all of the pressure is on its fiscal policy because it has no monetary policy levers at its disposal.  So I go back to Thailand as an example: they fought their way through the financial crisis using both of those levers and, because they had monetary levers at their disposal, their fiscal policy adjustments did not need to be as severe.  Part of the reason why you are seeing such turmoil in Greece domestically is because adjusting fiscal policy is the only option they have.  They can’t do anything with their currency so they’ve got to make dramatic changes in fiscal policy.

We should never underestimate the pain Greece is going through in having to slash its budget.  We’re talking about real programs, real societal impact, and real impact on jobs.  But, at least in theory, they also have some easier options such as improving the collection of existing taxes.  But let’s not underestimate for one second how challenging this will be.  What should Europe do?  What should Germany do?  I leave that up to Europe and the Germans.  Clearly this is very challenging because you could make a mistake at either end of the spectrum.  You could jump in, extend credit and engender the moral hazard question because that means that the next country that has problems will always feel like it has an easy way out.  On the other hand, if you just turn your back completely -- and I don’t think there is any evidence that is happening -- then you’ve got potentially catastrophic results for Greece.

Is Greece is the first of many countries that will have similar problems? Commentary in the media suggests that is the case. But I have heard others suggest that the situation in Greece is quite unique and in fact is not connected to other countries. I honestly don’t know which viewpoint is correct. But I think it is a question that has to be answered.

JB: President Obama achieved a major victory in getting his health care reform legislation passed by Congress.  What are the key elements of the new law? 

Amb. Murphy: The passage by Congress of President Obama’s health care reform legislation is a milestone in American history.  This is a tremendous step forward.  Let’s look at the situation President Obama inherited.   First, it was a situation in which U.S. health care costs added up to about 19 percent of our GDP, and both the dollar amount and the percentage of GDP were growing.  Secondly, we had as many as 47 million Americans without health insurance.  That was an unacceptable state of affairs.  It had to be fixed.   And the President’s health care reform legislation, which is now law, will go a long way toward achieving that.  Thirty-two million Americans who have been either too poor or too ill to be able to obtain private health insurance will now be guaranteed access to adequate coverage.  If someone loses their job, they will be able to get new coverage immediately from the exchange in their state.  Six months from now, insurance companies will no longer be able to limit the total amount of lifetime benefits or cancel policies of those who get sick, which sadly has been an all-too-common practice.  Children can remain on their parents' insurance policies until age 26, instead of 18 or 19 -- closing a significant gap in coverage between the time children leave home and the time they get their first job with benefits.  Starting in 2014, insurance companies will no longer be able to deny coverage to those with pre-existing conditions, and will have to provide better coverage.   The legislation will not fix everything that is wrong with our health care system overnight, but it is a huge improvement and a real victory for the American people.

JB: 200,000 people showed up to hear Barack Obama speak in Berlin in July 2008 - when he was only a candidate. He has continued to enjoy warm receptions abroad from world leaders and the press. At the end of his first year in office, however, his approval ratings in the US have slipped. You talk to so many different German audiences each week - what, in your experience, is the perception of Obama here in Germany?

Amb. Murphy:  I think the perception is very positive. Germans love him. President Obama embodies so many of the values and attitudes that are important to Europeans:  engagement, working together, the realization that we can’t go it alone, we can’t solve all of these problems on our own, whether they be geopolitical, economic or social or otherwise.  There is an enormous amount of respect for President Obama’s commitment to engagement and dialogue.  There is also enormous respect for his specific policies: his commitment to health care reform, his outreach to the Muslim world, his vision for a nuclear free world, to name three.  A fourth is the importance he attaches to improving our relationship with Russia.  Certainly our relations with Russia are significantly improved compared to when he came into office and that resonates very positively in Germany.

Some say he is not as popular in the U.S. as he once was.  When you are at 92 percent popularity, there’s really only one way to go, so I really don’t focus on that.  What is important is the way President Obama has in a conscious way, both in the U.S and globally, deployed his popularity to tackle some very tough problems.  He is bringing America to the table on issues that we have not been to the table on in years: He successfully tackled health care reform, which had not been debated seriously in our country for over 15 years.  We are back at the table with Iran after having been away for 30 years.  For issues of that complexity, you don’t just walk back in the door and expect success overnight.  To think that would be possible would be naïve

So I would just end with one caution: this is going to take time. One guy can’t do it all, one country can’t do it all. If there is acceptance and support for him personally and for his style, we need everyone’s involvement to solve some of these very challenging problems.

JB: Thank you very much for the interview, Ambassador Murphy.