One of the most prominent trouble spots in the global economy is Greece. The government’s massive and rapidly expanding debt burden has raised concerns that the nation might be forced to declare bankruptcy. In light of this danger, the US ought to take action to resolve Europe’s internal dilemma. It should push for measures to contain the crisis while preventing similar situations from arising elsewhere.

Greece’s default would be disastrous for the United States. It would threaten to reverse the nascent global economic recovery and work to destabilize the European Union. If Greece defaults on its loans, investors will likely lose confidence in other European countries with high debt ratios, raising borrowing rates to prohibitive levels. This would create a vicious cycle in which those countries would then find it much more difficult to finance debt, which could possibly trigger further default. Unfortunately, numerous obstacles exist to a potential EU-orchestrated bailout. There are legal and practical questions to deal with, as well as political considerations. Already, public officials in other EU nations, most notably Germany, have publicly voiced skepticism about whether to intervene in Greece, citing the high costs associated with such a step.

After several agonizing months of uncertainty, it seems as though most countries have emerged from the depths of the economic collapse that ensued following the 2008 financial panic. US GDP expanded by 5.7 percent in the third quarter of 2009, while Europe has witnessed slowing rates of decline, and in some cases, including Great Britain and France, even modest growth. The response undertaken during the crisis by Western leaders, most notably US President Barack Obama and UK Prime Minister Gordon Brown, was extraordinary, combining bank bailouts with expansionary fiscal and monetary policies.

While these remedies appear to have succeeded to a degree, they came at an enormous cost; both the United States and Great Britain now face budget deficits in excess of 10 percent of GDP. If the economy enters what experts have dubbed a “double-dip” recession, in which the initial recovery is followed by a second downturn, it is unlikely that governments will be able to intervene on the same scale as they did during the initial phase of the crisis, owing to insufficient resources and public hostility. The US spent $800 billion on last year’s economic stimulus package while the Federal Reserve drove interest rates to record lows. Incurring more debt through, for example, another stimulus package would further risk the long-term financial stability of the United States. Thus, it is imperative that the United States and its allies maintain the current fragile, uneven recovery, or they will be doomed to suffer a protracted period of economic underperformance similar to Japan’s “Lost Decade.”

With so much depending on the revival of Western economies, any potential obstacle to the achievement of that goal must be removed. Greek insolvency would not only bring its own economy to a grinding halt, but could also have a domino effect. Many other members of the European Union, including Spain, Portugal, Italy, and Ireland, are also coping with excessive debt levels incurred by rampant spending over the past decade and sharp drops in revenue owing to the recession. In spite of EU rules requiring that budget deficits not exceed 3 percent of GDP, the lack of any effective enforcement mechanism, combined with “creative accounting,” has allowed profligacy to go unpunished. Already, confidence in the Euro has plummeted, causing its relative value to drop. Concern about the future of the common market could lead Eastern European nations, such Estonia, Latvia, and Lithuania, to rethink their planned entry into the Euro Zone, while strengthening the appeal of “Euroskepticism.” Critics of the Euro have long argued that a monetary union would lead to this kind of a crisis; now, their warnings appear to be vindicated.

A weakened EU is not an outcome that would be favorable for the United States. Although American and European politicians have their differences on some issues, a strong, unified Europe is in the United States’ best interest. As the US combats the complex and pressing questions of international terrorism, nuclear proliferation, human rights abuses, trade negotiations, Third World poverty, and environmental degradation, it is important to have a partner capable of assisting in its effort to provide global leadership. A weak and divided Europe cannot fulfill this role if it is plagued by economic disunity and decline.

To this end, the United States ought to play an active part in preventing Greek default. It should lean heavily on France and Germany, the EU’s economic powerhouses, to orchestrate a bailout that includes strict austerity conditions, cutting spending and raising interest rates, along the lines of International Monetary Fund standards. A major US diplomatic campaign, with the active involvement of President Obama, can display the vitality of this issue. Greece needs more than a band-aid solution; it needs a complete overhaul of its economic system. For years, Greece has run deficits well above EU limits. Rampant corruption and wasteful spending have brought the country to its current juncture. Even today, in the midst of the crisis, intransigent public sector unions have organized street protests in Athens and elsewhere, demanding immunity from the severe repercussions of fiscal austerity.

Critics contend that past interventions that imposed austerity have had disastrous consequences. While this did occur in the short term in some cases, such as the Asian economic crisis of 1998, in the long run, budgetary restraint is the only way to set countries on the path toward sustainable growth, as opposed to a temporary expansion followed by yet another crisis. Countries such as Thailand, Indonesia, and South Korea, all of which accepted IMF loans in the late 1990s, rooted out corporate mismanagement and other practices that inhibited productivity, and the result was protracted economic expansion over the course of the past decade.

Like the countries of East Asia, Greece cannot be given a bailout without strings attached because it will create a problem of moral hazard, allowing Spain, Italy, and Portugal to continue their prodigal ways in hopes that they too will be protected. Instead, they should be following the example of Ireland, which in recent months has introduced tough reforms designed to control its budget deficit, including sharp pay cuts for civil servants. Although controversial, these measures have been largely accepted by the Irish public, as they acknowledge that the short-term pain of austerity is preferable to continued financial turmoil. Hopefully Greece will demonstrate a comparable degree of responsibility in dealing with its dire financial situation.

US involvement is crucial to ensuring that a rescue package is formulated and organized according to the principles of austerity. France and Germany are hesitant to offer assistance, but could be persuaded if the United States emphasizes the importance of the Greek situation to the global recovery and the perils of allowing the crisis to spread. Such an approach will reap vast rewards for the US and its allies in the form of increased economic growth and greater geopolitical stability. For these reasons, President Obama ought to make securing aid for Greece a top priority.

This is not the first time that an internal conflict in Yemen has become the epicenter of regional power tensions between major Middle Eastern states. In 1962, a coup d’état carried out by republican forces in Yemen overthrew the ruling Zaydi imamate. This coup sparked a civil war that lasted until 1970 and drew in Egypt and Saudi Arabia, the major Middle East powers of the day. While the scale of the present day conflict cannot compare to the Yemen Civil War, a vicious, drawn-out clash that resulted in over 100,000 deaths, policymakers would do well to study the lessons of Yemeni history. As the United States helps Yemen in its counter-terrorist campaign against al-Qaeda, it must pay close attention to these lessons to ensure that the country’s internal conflicts do not morph into a costly and destabilizing regional power struggle.

Yemen already shows signs of becoming a battleground for Middle Eastern powers. This past November, Houthi rebels crossed into Saudi territory and attacked a Saudi patrol, claiming that Saudi Arabia was assisting Yemen in its counter-Houthi offensive. This raid precipitated a wider Saudi campaign to crush the Houthi forces that has resulted in hundreds of deaths on both sides. Saudi Arabia also fears that Iran is supporting the Houthis to undermine Saudi Arabia’s regional position. This belief is bolstered by the rebels’ sympathetic portrayal in the Iranian media and their use of Katyusha rockets, weapons Iran has also provided to Hezbollah and Hamas, its other proxy groups in the region. Al-Arabiya similarly reports that Yemeni authorities have captured unmarked ships with Iranian crews carrying weapons bound for the rebels.

Iran’s support for the Houthis is particularly significant because the rebels are Zaydis, a small, heterodox sect of Shia Islam highly distinct from the Iranian Twelver Shi’ism. Iran’s support of not merely the Houthi Zaydis but also radical Sunni groups like al-Qaeda and Hamas demonstrates that the nation’s policy choices are dictated not by only religious doctrine but by an attempt to undermine and destabilize competing governments of the region.

This provides a striking parallel to the Civil War in North Yemen. Then, as now, Yemen served as a battleground for regional hegemony. Egypt, under the leadership of Abdel Nasser, sought to extend its influence over Saudi Arabia by supporting the republican forces in Yemen. These forces overthrew the Zaydi royalists, who received support from Saudi Arabia despite the clear doctrinal differences between the faith of the Zaydis and Saudi Arabia’s conservative Wahhabi brand of Sunni Islam. Ultimately, religious considerations took a backseat to the threat posed by revolutionary Egypt to the Saudi monarchy. Though the current Yemeni conflict has not yet resulted in war, Yemen continues to serve as a crucial hot spot for regional power struggles, and the United States must understand that forces greater than religion are at play.

The past conflict also provides important lessons about how impermanent and tenuous alliances in the region can be. In the past war, the Houthi rebels, now viewed as an Iranian proxy, received support from Saudi Arabia. Iran also supported the Zaydi royalists, sharing the Saudis’ fear of the growing power of revolutionary Egypt. Because alliances in this troubled area are clearly motivated by strategic convenience rather than, as some in the West believe, religion, these alliances can change radically over the course of mere decades.

The potential danger of growing Iranian influence is perhaps the greatest specific lesson for the US. At the beginning of February, the Houthi rebels and Yemeni government signed a cease-fire. While this cease-fire has admittedly been breached on occasion, the United States now has an opportunity to capitalize on the relative lapse in violence and take steps to prevent Iran from turning the conflict into a proxy war that could disintegrate into a second Yemeni civil war. One important step that the US can take in order to prevent the Yemeni conflict from becoming part of this growing trend is to devote its naval resources in the Gulf of Aden to assisting the Yemeni government in preventing Iranian weapons from reaching Houthi rebels. A concurrent effort to convince Saudi Arabia, a nation in which the US stations troops, to lessen its direct involvement in Yemen could also have important long-term consequences in lessening the scope of the conflict.

US policymakers must recognize that, as in the past, the alignments between regional powers and their proxies in Yemen are not based primarily on a religious Sunni-Shia divide but are instead grounded in strategic concerns. While current regional alignments in the Middle East may seem to be set in stone, they in fact may undergo dramatic and unexpected shifts as the strategic environment on the ground fluctuates. Therefore, when US policy makers confront Yemen and the Middle East as a whole, they must strive to remain a step ahead of the game, drawing lessons from the North Yemeni Civil War about the mutability and ever-changing nature of alliances and hostilities in the region.

At present, the Taliban leadership is in no mood to negotiate; its position is too strong. Even if, however, the Taliban leadership were somehow swayed in the coming weeks, and the government managed to produce a set of policies—amnesty, political participation, material incentives—sufficiently favorable as to induce Taliban cooperation, this would mean that an already unpopular, distrusted government would openly reward the very group that ruled tyrannically over the Afghani people before the American invasion, the group that has been at war with its own country since 2001.

This policy would doubtless run into serious backlash. Afghanis remain fundamentally bitter towards the United States; Americans were largely welcomed in 2001 as a hopeful improvement over the Taliban, but the gains for average Afghanis thus far have been small. If the American-backed Afghan government offers material incentives to the Taliban—that is, provides for the Taliban in a way that society as a whole has not been provided for—resentment towards the occupiers and the government will understandably deepen, especially amongst the ethnic Tajiks and Hazaras who have fought against the ethnically Pashtun Taliban. This is resentment, which a tenuous, disastrously corrupt government can ill afford. Indeed, by losing the support of the population, this would be to break counterinsurgency rule number one.

The even greater worry is that reconciliation would risk inviting a return to Taliban rule. The weak, unpopular Afghan government will only become exponentially more unstable when the United States and NATO inevitably reduce their presence. If reconciliation brings an intact Taliban back into the societal fabric—and, indeed, into the political process—there is a real danger that the progress made over the last eight years will be subverted by a gradual reentry of Taliban influence. Even if the Taliban agree to cut a deal and put down the guns, it cannot be expected to rethink or renounce the militant, retrograde, and repressive ideology which lies at the very heart of their movement. Any leader who renounces that ideology in favor of a bribe or the democratic process would not just risk his leadership status, he would also risk his head.

This has sinister implications for the Afghan state should the Taliban gain any real foothold in the government. If, in five years, for instance, education is once again forbidden for women above age eight, the US will have failed. Moreover, the Taliban can scarcely be expected to faithfully renounce its alliance with al-Qaeda, because that alliance has long been a fundamental power source and would, in the event of reintegration, provide fervid support for the resurgence of Taliban dominance. Should this resurgence occur and al-Qaeda begin to regain its position in Afghanistan, the US will be markedly less secure.

That said, this speculation is presently moot, because any real concessions from the Taliban leadership simply aren’t credible until the American and Afghan forces have gained more ground. The Afghan government is weak and corrupt, and the Afghan security apparatus is inept. American involvement has an expiration date, and Mr. Karzai himself has voiced skepticism about the government’s survival given the drawdown plans. Two dozen Afghan police officers recently disappeared, taking their trucks, guns, and heavy weaponry with them; it’s suspected they defected to the Taliban, following in the footsteps of hundreds of its colleagues. Certainly no progress will be made as long as Afghanis keep seeing greener pastures in the Taliban camp, because the Taliban will continue to think it can win, and it may be right.

Therefore, the coalition’s strategy in Afghanistan centers on gaining the upper hand to loosen the Taliban’s grip on the country while gaining popular support to make sure the grip stays loosened. This begins with operations like the present offensive in the Taliban stronghold of Marja. General Petraeus’ recent proposition that the current work in Marja is but the “initial salvo” in a campaign that may take 12 to 18 months underlines what will be an indispensable American asset in the coming years: patience. Americans need to recognize the potential for drawn out commitment in cases like Marja, where we simply cannot leave until a durable government is in place. We need to be prepared to exercise the utmost patience and to defer to military judgment as we approach the drawdown date in 2011. The risks of withdrawing prematurely will be monumentally greater than the risks of remaining to bolster stability.

Allied forces need to ramp up the sacrifices in another sphere as well; they need to be willing to contribute money, and a lot of it. The ability to provide for the Afghani people will be pivotal. Legitimate leadership in Afghanistan has always—dating back centuries to times when tribes ruled themselves, autonomous of any formal state—rested on the ability to accumulate and redistribute wealth to subjects. In order for Mr. Karzai’s government to gain support, allies need to be ready to finance poverty alleviation programs, rural development, and investment in irrigation canals and roads in order to help craft the image of a government that is a meaningful improvement on its predecessors. The US should also be directing money as aggressively as possible towards the bottom-up subversion of the Taliban, both by offering monetary incentives to the rank and file members—those driven by desperation, not by ideology—and by orchestrating more operations like the recent outreach to the Shinwari tribe, whereby the tribe received aid in exchange for committing to take an aggressive stand against the Taliban and all who harbored its fighters.

In a time of severe recession, providing substantial aid is naturally a gut-wrenching prospect. Yet the future of Afghanistan needs to be viewed as an investment, one into which hundreds of billions of dollars and thousands of lives have already been poured, and one whose collapse could be a considerable setback in the global war against terrorism.

The US needs to tread very carefully in neighboring Pakistan, which will ultimately be pivotal in maintaining stability after American withdrawal. Pakistan has recently shown what appears to be an increased willingness to strike aggressively at the Afghan Taliban on its own soil, capturing several senior Taliban leaders, including Mullah Baradar and Mullah Kabir. Perhaps these recent arrests underscore a new Pakistani resolve to abandon the strategy of controlling Afghanistan through support for the Taliban. Yet Islamabad is simultaneously pushing to take a leading role in reconciliation attempts, and it could be that the increased cooperation is intended to earn, in American eyes, a seat at the head of the negotiations table. The US must remain acutely cognizant of the fact that Islamabad’s overwhelming priority is to maintain influence in Afghanistan, and that if the Taliban remain strong, it may choose to favor the terrorist group regardless of its current antagonistic posture.

The US should thus aggressively encourage, with aid and equipment, further efforts like those which captured Baradar and Kabir. We should denounce reconciliation at the current status quo, and promise Pakistan a central position in reconciliation that may occur in the future with a drastically weakened Taliban. We should offer the Karzai government incentives to forge a close, cooperative relationship with the Pakistani government, and we should be highly explicit in warning Islamabad that any identifiable complicity in a future Taliban resurgence will be met with severe diplomatic repercussions, including the full withdrawal of American aid.

With these tactics in place, the time may come when the government can claim the upper hand in settling with the enemy. Even then, Afghanistan will remain desperately poor and widespread satisfaction with the government will be difficult to obtain. Reconciliation in this environment will first and foremost demand a purging of figures like Mullah Omar. These charismatic, ideologically-driven leaders, remarkably adept at transforming popular disillusionment into violence, must be permanently isolated from the Afghan populace. A tenable reconciliation plan might therefore include a hierarchy of reintegration, whereby the foot soldiers are fully embraced into society, the mid-level leadership are reintegrated but permanently barred from holding political office, and the top tier leadership like Omar are granted amnesty but rejected from the fabric of Afghan society, and perhaps even forbidden on Afghan soil.

These sorts of restrictions will be fundamental in preserving the order as the dust over Afghanistan settles, but they will obviously be rejected outright until the day when the Taliban can no longer see victory on the horizon. The Afghan government must reach the point where it can negotiate with a Taliban that is very much defeated and that will remain so—lest popular unrest, Pakistani (or al-Qaeda) support, or some combination thereof subvert the progress that has been so costly in blood and treasure.