Ex-leprosy patients of Sitanala village, Tangerang, received Saturday 14 wheelchairs from Rotary Club Jakarta Sentral (RCJS), helping support the rehabilitation process.

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Shortly after Greek Prime Minister George Papandreou took office last fall, he learned that he’d inherited a massive booby prize: a budget deficit that was twice the amount the previous government had disclosed. But, when Papandreou came clean and promised to address the problem, the financial markets reacted violently. Interest rates soared, adding billions in debt-service costs to an already dire budget picture. And so, when Papandreou arrived in Washington in March, the stated reason was to push his brief against speculators--who, he claimed, had driven up Greek borrowing costs to usurious levels. “[We] were bold enough to reveal these problems,” Papandreou said at the time. “But we were also penalized for revealing these problems.”

Unofficially, however, the point of the trip wasn’t so much economics as political economy: to subtly suggest that Greece had allies outside Europe who could help deal with its debt crisis. For weeks now, the Greeks and their eurozone neighbors have been engaged in an awkward dance. The French and Germans, who hold outsize sway in the monetary union, have shunned talk of a bailout, which would go down in their countries about the way the Wall Street bailout went down in this one. (The image of entitled Greeks frolicking on sun-splashed islands occupies roughly the same mental space in Northern Europe that “fat-cat bankers” do in Middle America.) The Europeans imply that there’s little risk of contagion and believe Greece should largely clean up its own mess. For its part, Athens has formally denied interest in a bailout. But it has desperately played up the seriousness of the situation so as to obtain some sort of assistance, suggesting the turmoil could spill into Ireland and Portugal, even large economies like Spain and Italy.

By trekking to Washington, Papandreou hoped to ever-so-slightly tip the balance in this showdown. As Gikas Hardouvelis, a former economic adviser to one of Papandreou’s predecessors, described the thinking to me, “Let the Germans feel that you do have Obama’s ear so that they don’t feel like super dictators.” But the truth is that Washington can’t play a direct role for fear of meddling in European affairs.

Which raises an interesting geopolitical question: How does the world handle a crisis when the United States can’t step in? The answer, so far, is not very well. Without a third-party broker, it’s not clear that the Greeks and Europeans can strike a bold enough deal soon enough. And that could be a problem not just for Europe, but for the entire global economy. “Just as subprime in the U.S. affected Europe,” says Ted Truman, a longtime Fed and Treasury official who advised Secretary Timothy Geithner last year, “there’s no reason a crisis in Greece, Portugal, and Spain couldn’t affect the United States and the rest of the world.”

The day after his meeting with Obama, Papandreou turned up at the Center for American Progress (CAP), an influential liberal think tank three blocks from the White House, to field questions from a small group of journalists. He is in his late fifties, trim and mostly bald, with a modest gray mustache. All in all, he looks less like a world leader than the proprietor of a refrigerator-repair school you might see advertised late at night. Papandreou’s father, Andreas, was himself a Greek prime minister. But, while the father was famous for his fiery, rabble-rousing speeches, the son exudes a pronounced anti-charisma. There were times during the Q&A when it was tough to hear him over the whir of the air-conditioning.

Still, what Papandreou lacks in physical presence he more than makes up for in stature on the international stage. Hardouvelis points out that Papandreou is the current head of the Socialist International, giving him easy access to foreign eminences. Perhaps more important, his five-year tenure as Greek foreign minister beginning in 1999 won rave reviews in Europe and beyond. In 1996, Richard Holbrooke marveled that Greece and Turkey had been on the verge of war “over a little piece of land smaller than the State Department.” Many in Foggy Bottom credit Papandreou with defusing the decades-old hostility behind such flareups.

Against this generally favorable backdrop, the particular card Papandreou wants to play in his dealings with Europe is the threat of turning to the International Monetary Fund (IMF). European federalists cringe at the thought of the Fund’s shock troops landing on their soil--the mere symbolism would deal a blow to the idea of continental self-sufficiency. So Papandreou has sought leverage by publicly musing about inviting the IMF to Athens. “We have done our duty, what we were told to do ... it’s important for Europe to recognize this,” he said at CAP, alluding to proposals to pare back his country’s deficit. “In the case that Europe does not have the necessary tools, and a country like Greece did have real trouble borrowing, then the alternative would be the IMF.”

Of course, no one expects Greece to call in the IMF unless it’s truly on the verge of a meltdown. Among other obstacles is the European Central Bank (ECB), whose authority over monetary policy is supreme. (By contrast, the Fed must answer to Congress on occasion.) The ECB jealously guards its bailiwick and would be horrified to take orders from IMF officials. “The Germans are concerned about the ECB,” says former IMF chief economist Simon Johnson, a TNR contributor. “They will control it next--it’s their turn dammit! They don’t want the IMF kibitzing.” If nothing else, the Germans and French enjoy disproportionate influence on the IMF board. They could effectively prevent the Fund from accepting a Greek plea for help. This is all the more likely when you consider that French President Nicolas Sarkozy has been warily eyeing his countryman Dominique Strauss-Kahn, the IMF managing director, for months now. Strauss-Kahn has hinted at a presidential run in 2012, and Sarkozy presumably isn’t eager to make him Europe’s savior. [Editor's note: Following the print publication of this piece, the German government changed course and suggested it might support an IMF intervention. The French and the ECB appear to remain opposed to the idea, though the situation is fluid.]

By the same token, observes Jacob Funk Kirkegaard of the Peterson Institute for International Economics, few doubt the French and the Germans would pony up if Greece were really teetering. Nothing would deal a bigger blow to the European project than a spectacular flameout by one of its members. The point is just that resolving a situation like Greece’s shouldn’t require the threat of imminent collapse, by which time the crisis could have spread around the globe.

That’s the reason why, for all the headaches it poses, the IMF deserves to be more than a bargaining chip. While noble, Papandreou’s deficit-cutting efforts aren’t likely to be sustainable. They simply ask too much of his country too quickly, attempting to reduce a deficit of 12.7 percent of GDP to under 3 percent within three years--all at a time when Greece is already in recession. Even if Greece can painlessly refinance the roughly 20 billion Euros in debt that come due this spring, future refinancings will be brutal if the austerity regime unravels. “I think the amount of adjustment they’re asking for in a short period of time is in the draconian category,” says Truman. “It’s likely to fail. So we’re going to have another chapter.”

Pretty much the only way to avoid a relapse is a financing package worth at least tens of billions of euros. That would buy Greece some time to roll back its deficit at a more humane pace. And, as a practical matter, the IMF is the only institution that can quickly muster enough cash.

But the case for IMF intervention isn’t just economic; it’s political. For all the tensions it would create in Europe, turning to the IMF could actually solve many more. As the Financial Times’ Martin Wolf has pointed out, the Germans are basically pursuing two contradictory goals in their dealings with Greece. On the one hand, they want to inflict pain so as to restore credibility to EU rules governing deficits, which members have flouted for years. On the other hand, they want to preserve European cohesion, which could fray if the Greeks--and other countries at the continent’s periphery--feel they’ve been wronged. Wolf wagers that one or the other goal must give. But turning to the IMF might resolve this contradiction. However embarrassing it would be for Europe as a whole, it’s Greece that would bear the scarlet letter of IMF assistance--a loss of face few neighbors would care to repeat. At the same time, notes Randall Stone of the University of Rochester, the Greeks wouldn’t have the pedantic Germans to blame for their plight. They could focus their ire on those faceless bureaucrats at the IMF’s Washington headquarters.

And then there are the Americans. Though Obama administration officials don’t appear overly concerned about Greek contagiousness, they probably secretly pine for an IMF intervention. Both Geithner and Larry Summers, the top White House economic adviser, have said that most countries are too slow to respond to a financial crisis, and too tentative once they do. The two men have long favored a “Powell doctrine” of overwhelming financial force. Only the IMF can execute that here.

Alas, decorum dictates that Geithner and Summers essentially keep quiet. And so, on his way out of Washington, Papandreou was left to plead his own case. At the CAP session, one reporter mentioned a recent Greek debt offering that went slightly better than expected. “We had the good news of having our borrowing ... at a rate which was lower than previously, but still not low enough,” Papandreou bleated. “That’s not, in the long run, sustainable.” Then again, he added joylessly, he was still “in the process” of negotiating with the Europeans. Somehow, it was not reassuring. 

Noam Scheiber is a senior editor of The New Republic.

You do not need insider information to know that Hillary Clinton threw a hissy fit at Bibi Netanyahu last Friday morning. And you don’t need that kind of information to know that she was sent out to do this little job by her boss. Just as Joe Biden revealed that it was President Obama who’d compelled him to “condemn” the Israeli interior ministry’s press release announcing that the fourth out of seven required approvals had been passed, leaving three others and several years to go before construction could even begin on the 1,600 housing units in Ramat Shlomo, an East Jerusalem neighborhood of some 20,000 unpatriotic but ultra-Orthodox Jews, may God bless their little Shloymeles and Leahs.

This is a pretty draconian response from Washington to a pretty minor (albeit ill-timed) provocation. Especially as Israel, in agreeing not to start new construction in the West Bank for ten months, had said that it was specifically exempting East Jerusalem from this interdict. While recognizing this exemption, on October 31, 2009, Hillary Clinton called Israeli forbearance on new building “unprecedented.” So what has changed? The Palestinians proved to be more recalcitrant rather than less, likely because they had quickly surmised that Obama was in their corner and would not push them much. Their surmise turned out to be correct. In the particular case of Ramat Shlomo, the United States quickly joined its Quartet partners--the European Union (itself in some disarray), the United Nations (a literal joke in the world), and Russia (which has done so much for peace in the Middle East)--to denounce Israel’s disdain for their sentiments.

Before anyone leaps to the conclusion that I favor unlimited Israeli construction in East Jerusalem, allow me to say that I don’t. Moreover, I envision, if the Palestinians come to their senses (which, frankly, I cannot assure they will do), that Arab neighborhoods in that part of the city will be joined to land under the dominion of the Palestinian Authority (PA) to constitute Palestine. Most Israelis would be perfectly prepared to part with these areas under a finalstatus agreement. So, “undivided Jerusalem” will evaporate like the mist in the morning. Special and very delicate arrangements will have to be made for the Holy Basin, including the Temple Mount (or the “Haram Al Sharif,” as the Muslims call it). And let’s be clear about the sacred places on the Mount. When they were captured in June 1967, administrative authority over them remained with the Islamic waqf. Jewish prayer was forbidden there, although some Jews wanted to pray there, and some still do. Instead of the Mount being encroached upon by Israeli authorities, it has been protected by them. The assault on the space has come from Muslims, who conjure up perils to its integrity. When prime minister the first time, Netanyahu opened the Western Wall Tunnel--and Arafat responded by inciting riots that claimed 80 lives. Ariel Sharon walked on the Mount and there followed the second intifada, a feast of terror.

The Israelis will not allow the future of Jerusalem to be decided by a riot-backed fiat of the Muslims, whose claims on the city are inflated. OK, I am a doubter. By way of compensation, then, I will concede that Muhammad did ride his winged steed Al Buraq on his Night Journey to Jerusalem and, from there, ascended on a ladder to see Moses and Jesus in heaven. Otherwise, however, Jerusalem is to Islam what any other city with a big mosque is. And this particular city was ignored over the many centuries and especially when it was under the dominion of King Hussein of Jordan. But it lives centrally and vividly as the City of David to his people and to the faithful of Jesus who walked there along the Stations of the Cross to Golgotha--that is, in the two traditions whose cardinal books are centered in Zion. Jerusalem becomes sacred to Muslims when it is governed by Jews or Christians, Jews in particular.

I have distaste for the ultra-religious Jews who, through both stealth and stupidity, maneuvered the Netanyahu government into this confrontation with its most significant ally. I also know a little about how this happened. A mid-level, faceless bureaucrat issued a press release as she issues other press releases, mostly on the trivial. Did some higher-up grasp that this would make trouble for Bibi and give the information more life? My guess is that the answer is “yes.” The Israeli parliamentary system is a vipers’ nest and has been for decades. The main activity of the coalition partners is to undercut each other. The Shas Party, whose functionaries run the interior ministry according to their dictates from God, uses every occasion it can to push its own idiosyncratic agenda, no matter how little support it has in the public. If it makes trouble for the government itself, so much the better.

David Axelrod has now put an ugly political spin on this turmoil by suggesting that the Israeli move was designed to undercut the “proximity talks” that had been planned. What’s more, Axelrod argued, this was an “affront” and an “insult” to the United States. Not to be outdone in inflammatory talk, ABC’s Jake Tapper, who was questioning the political adviser to the president, goaded him further: “I hate to say this, but yes or no, David, does the intransigence of the Israeli government on the housing issue, yes or no, does it put U.S. troops’ lives at risk?” Axelrod declined to take the bait. The idea was already out there.

Still, Axelrod, a strange guy to go out and comment on Obama’s foreign policy, was not just speaking for himself. Like Hillary Clinton, this kind of talk was a decision of the president himself. No one on the White House staff denies this. You don’t have to ask about it. Almost everyone who’s anyone at 1600 Pennsylvania Avenue or in Foggy Bottom will volunteer the news: Obama is “rip shit” with the Israelis. So how long has he been rip shit? I believe that he has been sitting in waiting for the opportunity to have others send the message: “The president has blown his top.” When talks fail, which they inevitably will, he will present his own plan. Beware.

Obama had gone out on a limb about Israel-Palestine. It was based on very faulty history or, rather, on a canny distortion of history. The fact is that neither George Mitchell nor Hillary Clinton nor the president himself has wrangled a single concession from the Palestinian Authority, not one. In fact, the whole structure of the talks is built on yet another concession from Israel. The press is so unknowing that it simply didn’t realize or didn’t care about the nature of the concession. But, to anyone who knows and cares about history, the arrangement is nothing less than spooky.

The idea of proximity talks goes back very deep into the past. It was actually transcended in the negotiations between Yasir Arafat and the strained Israeli duo of Yitzhak Rabin and Shimon Peres. Since then, in fact, face-to-face consultations had become more or less routine. Sometimes they were desultory; other times they were not. On occasion, they were very productive, as with the agreement to field a U.S. training mission for Palestinian police with deep cooperation from Israel.

So, proximity talks are a big retreat from reality--not a surprise, but a big retreat nonetheless--when the Palestinians want only to talk with the Americans. And then, the Americans will talk to the Israelis, and back and forth through the American mediator, presumably a tired Mitchell who hasn’t had a fresh idea in years. Now he has allowed the Palestinians to push him back to the idea of indirect negotiations, and, apparently, Obama also does not object--or maybe it was his own fix-it device. This is an old nightmare in the Jewish memory bank. Already, at Versailles, there was no contact between the Zionists and the Arabs and no contact at later conferences at which the question of Palestine was discussed.

The St. James Conference, called the London Round Table and convened by Neville Chamberlain(!), attracted all the leading Zionists and the best-known non-Zionist Jews. Saudi King Ibn Saud’s son, Emir Faisal, was in attendance, as were Iraqi Prime Minister Nuri Al Said (who was butchered on the streets of Baghdad 20 years later) and Jamal Al Husayni, a relative of the notorious grand mufti of Jerusalem. We have a description of what happened in London from the eminent historian Walter Laqueur:

The Arabs refused to sit at one table with the Jews and arrangements were made for them to reach the conference hall in St. James’s Palace by a different entrance. There were, in fact, two separate conferences. Only on two occasions did informal meetings take place between Jewish leaders and the representatives of Egypt, Iraq and Saudi Arabia. The Palestinian Arabs refused any contact with the Jews.

Eight years later, another conference assembled in London, this time summoned by the British foreign secretary, Ernest Bevin, who--how can one say this?--simply did not like Jews. The conference, writes Laqueur, “was a repeat performance for those who had been to St. James’s Palace eight years before. There were no new proposals to be discussed, nor, as in 1939, were there any direct meetings before Arabs and Jews.”

The Arabs put their fate in the gods of war, expressing “the view both privately and on occasion in public that historical conflicts are always settled by force of arms and that one might as well have the struggle right away and get it over.” The General Assembly convened in November 1947 and sanctioned the creation of a Jewish state (yes, specifically Jewish state) and an Arab state (not, as it happens, a Palestinian state, since even the concept of a “Palestinian” did not have real life at the time--the “Palestinians” were the Jews). Thus, the Arabs went to war ... and were handily defeated. At the various armistice talks, no Arab would sit at a table with an Israeli.

That the president and his team should now take up this old Arab formula for disguising reality demonstrates the poverty of their grasp of the problem at hand. In fact, Obama seems to think that he is the superego of the conflict and that his function is to hand out dicta on how to end it. But he has no dicta for the Palestinians and plenty for the Israelis. The Jewish state has many conditions under which it would be prepared to give more rather than less. Alas, the president can’t bring himself to publicly acknowledge this. The fact is that he does not particularly like Israel. Which is why it is so frightful to have his messenger running between Jerusalem and Ramallah making demands on the Jews.

Martin Peretz is the editor-in-chief of The New Republic.