Ian Bremmer

For months now, the world has been waiting for the results of the momentous elections in Greece and in Egypt. In Greece, it was hoped that citizens would reject candidates who called for the breakup of the euro zone, or a Greek exit. In Egypt, the stakes were simpler, but larger: It was hoped that the election itself wouldn’t be a sham and that the country’s people would get their first true taste of the power of democracy.

It felt like everyone was holding their breath for the results in these two troubled countries, but it turns out neither country had the “disaster election” that some pundits feared. No, what both countries had was a “kick the can” election: For very different reasons, neither Greece nor Egypt is going to transform into a flourishing, liberal, fiscally sound nation overnight. And the task of governing in either country, therefore, is no big prize to either Greek Prime Minister Antonis Samaras or Egyptian President Mohammed Mursi. A lot of chips have to fall in their favor before they can even begin to get beyond the basic duties of simply showing up to work in the morning and keeping the lights on in government. But again, each country’s situation is different and bears a different explanation of the reality on the ground. Let’s take Egypt, with its internal threats to stability, first.

While the election of Mursi, the incoming Egyptian president, is a signal achievement that goes a long way toward instituting a tradition of civil rather than military rule, he alone will not get the economy to stand on its feet. The Egyptian tourism industry, its most important, has been absolutely crushed. The economy is in a shambles as the thread that was holding it together – Mubarak’s dictatorship – has been pulled from the fabric of Egypt, and the country is a long way from convincing anyone that it has recovered. While Mursi was the better choice for Egypt, he comes from the Muslim Brotherhood, basically a civic organization with no experience or expertise in macroeconomic management. The brotherhood is an important social organization: It’s a lot of things to a lot of people in Egypt, but it’s not an incubator of technocratic economic thinking or governance. That’s what the country will need to get back on its fiscal feet.

And as long as Egypt’s economy is struggling, the civilian leadership will face a threat from the country’s military leaders, the Supreme Council of the Armed Forces. The SCAF supported Mursi’s opponent, Mubarak’s former prime minister, Ahmed Shafiq. Mursi will have to go a long way to get out from under the SCAF’s thumb, and it’s unclear what resources he’ll have to do that, with his narrow win. One thing is for sure: A “kick the can” strategy will look enticing in this environment. Mursi will most likely postpone fixes for long-term problems to brighten the nearer-term outlook. Take subsidy reform. Right now Egypt spends almost 10 percent of GDP on subsidies, mostly for food and fuel – a situation widely recognized as inefficient and unsustainable – but 51.5 percent of the popular vote is no mandate for Mursi to take on the unpopular task.

In Greece, the general problems of its debt crisis and need for austerity measures to persuade the Germans to bail it out, have been discussed to death in the media. Samaras has taken over from a caretaker government, and he’s got his work cut out for him. But things did not get off to the best start, as his technocratic finance minister, Vassilis Rapanos, has already bowed out of the job due to health problems. With Samaras himself also in the hospital recently for emergency eye surgery, Greece is quite literally laid up right now, hoping it has more time to figure out its next economic move.

Don’t expect much, in other words, from the governments of Mursi and Samaras. While the elections went as well as they could go, nothing fundamental has changed about the pickle both nations find themselves in. Both leaders need fixes that appear to be far outside of their control. Mursi needs to figure out how and whether he can work with the Egyptian military to begin turning his country around. Samaras may have had a say in appointing the new finance minister, Yannis Stournaras, but the real issue is out of his hands: He needs Germany and the euro zone to accept a renegotiation of the existing loan package for Greece, which, over the long run, it cannot afford. The best thing that can come out of both of their tenures is some stability, which would, one hopes, beget even more stability, shoring up the democratic sovereignty of both countries.

But even with that good outcome, which is far from assured, each country will still firmly be in kicking-the-can territory. It will take years before affairs in Greece and Egypt get back to anything like normal. Just as in Germany’s takedown of the scrappy but overmatched Greeks in Euro Cup play this weekend, there will be no miracles this time around.

This essay is based on a transcribed interview with Bremmer.

Everyone knows the world’s economies are becoming ever more intertwined, but we’re only just starting to understand the ripple effects.

Welcome to the new global economy: One guy sneezes, and someone else gets a cold. That’s what we’re seeing in the slowdown now happening in the U.S., in Europe and in emerging market countries all around the world. Barring some kind of radical decoupling, the tight correlation in fates between these economic titans is a phenomenon we had better get used to, and understand, because it’s not going away. Indeed, this fact by itself – that our world is operating more and more like one big system every day – is not all bad news. However, a word of caution: Where interconnectedness yields benefits, it also creates pitfalls. Let’s look at a few examples of how this global system is actually working in our favor.

First, take the recent drop in U.S. Treasury yields. This is the more important macroeconomic story in America right now. Can any politician, with a straight face, continue to claim that getting the Simpson-Bowles recommendations passed into law was any kind of imperative for Congress or the president? The continual driving down of lending costs for the U.S. has made a mockery of credit-rating agency warnings and any perceived threat that a downgrade once held for the U.S. economy. Indeed, it takes some of the air out of the big debt-ceiling showdown that is set to take place between Democrats and Republicans in January 2013, when the $110 billion-dollar budget reduction is set to take automatic effect. It becomes increasingly hard to argue that reducing the deficit is priority number one to getting the country back on track when the cost of lending is so incredibly cheap and when the world’s investors are telling the U.S. they want more, not less of it.

Now, the low cost of lending today is not to say that the U.S. should be running up the debt, nor does it mean Washington can avoid addressing its structural spending issues – it very much can’t. But is now the right time to do that? For those who claim we should be listening to the signals the markets give us, it’s clearly not the right time to be cutting back on spending.

But now let’s consider the U.S. debt ceiling in light of the never-ending drama that is the euro zone crisis. There’s a growing sense in the U.S. and on the Continent that America has wasted its financial crisis. Its banks are bigger and seemingly more powerful than ever. (See Jamie Dimon’s Senate testimony, where he mostly had our public servants, some of whom are his former employees, wrapped around his little finger.) Meaningful financial regulatory reform still feels ephemeral at best, the economy is recovering only in fits and starts, and yet the entire country seems indignant that the whole thing isn’t moving along faster. In Europe, to the contrary, nothing is healed, and little has been reformed, and politicians there, led by Germany’s Angela Merkel, continue to insist that no zone-wide bailouts are coming until the peripheral countries set their own fiscal houses in order.

In other words, we’re seeing two very different approaches to the same basic problem of structural, long-term overspending play out in the US and Europe (though the two crises are very distinct on a number of levels). It’s too early to tell if the European approach will work better than the U.S. one, but the Europeans have already managed to install technocratic governments in Italy and Greece, force austerity measures on to much of the periphery, and change the very tone of the discussion from a short-term bailout to a long-term structural fix. It seems that although it was Rahm Emanuel urging President Obama to never let a crisis go to waste, his message actually reached the ears of Merkel and Italian Prime Minister Mario Monti instead.

Here’s the thing: Even if the tables were turned, and the U.S. was squeezing banks incrementally while Europe took on a trillion-euro bailout in one fell swoop, neither economy would likely be much further along on recovery than it is today. These things simply take time – national economies, like aircraft carriers, don’t turn on a dime, and the crossover effects from one economy to the other might take years to manifest themselves. In that way, there’s a measure of safety in our mutual crises and the journey out of them, as the worst (and best) outcomes are softened.

But remember those potential pitfalls of our newly interconnected world?

The economy that should scare us the most right now is the Chinese one. The country is slowing down, and that’s precisely because of the halting recovery and weakness in the U.S. and European systems, and the fact that the sputtering has been going on for some time. The U.S. and Europe can wait out our own recoveries. Our advanced economies are resilient. Even in the depths of our crises, the economic suffering, though real, has been muted. But China, despite its rapid modernization, is still, structurally, an emerging market. It’s far more vulnerable to economic shocks. And its political system, already facing turmoil in advance of that country’s leadership changeover later this year, is far more unstable than those in the West. If the developed world stops buying the stuff that China makes, it will force China to turn inward and double-down on state capitalism.

That would be dangerous for U.S.-China relations for a dozen reasons. Here are two of them: If China increasingly looks to state capitalism to sustain its growth, it will put it more at odds with free-market capitalism abroad – and thus, the United States. On top of this, any domestic instability could lead to a more bellicose Chinese foreign policy to drive nationalistic sentiment. The bottom line: We’d see an economic problem start to turn into a political one. The West can limp along, in other words, for some time. It can bungle parts of the recovery, make mistakes, watch job numbers grow and shrink, and still, in all likelihood, come out all right in the end. But when Europe sneezes, it’s not the other developed economies in the world that will fall ill. What we haven’t yet seen happen in this truly global crisis is the contagion spread from the developed world into still-developing economies. Europe and the U.S. might be sneezing, but if they don’t get themselves on the mend, it’s China – the single biggest buyer of U.S. debt, mind you, that might end up contracting the flu. And that’s just one, knowable risk of our new global economy. Who knows what others there may yet be?

This essay is based on a transcribed interview with Bremmer.