Eurozone Redux

I’ve been absent for two good reasons.  The first is that political events are unfolding at too rapid a rate to make any sensible comment that would last more than a few hours.  Reading other blogs which vainly attempt to prognosticate, let alone to analyze, the collapse of the Euro, Syria’s seemingly unending nightmare, fear mongering, obstructionist Republicans in the US, the mess that is Egypt, Turkey’s coming of age, Russia’s desperate struggle to keep old ties afloat while deliberately alienating the West, etc. etc., I decided the task was not only fruitless, but rather stupid.  So I’ve watched al Jazeera and waited.  The second reason is that I’m busy.

Nevertheless, with yet another “final” Euro summit underway the time seems appropriate to re-address the unraveling of the Eurozone. 

At the crux, of course, is Greece.  The election of the centrist coalition solved nothing,  If the left had won, Germany’s bluff would have been called. But, unfortunately now that particular scenario has been delayed.  In the lottery for the dubious honour of becoming Greece’s Finance Minister so that the Germans could kick him and solutions down the road, Yannis Stournaras won.  He was there in 1994 to negotiate Greece’s entry into the Eurozone.  He may well be there on its exit.

Minister Stournaras only has a couple of moves before disintegration.  Will they happen and will Germany accede?  No.  But, anyway, official time for Europe has expired and we’re now in the first overtime.  Yannis Stournaris must resist the pressure to buy more time by extending the bailout, which will only produce more debt which will be paid to German banks in the end.  Don’t extend the bankruptcy. Call the German bluff.  Get a deal from Europe.

Keep in mind that all the bailout funds masterminded by the Germans are nothing more than payments to the banks, not to the Greek people.  Furthermore, much of the bailout goes to allow Greek banks pay German and other European banks for loans that should never have been made.  Greece’s sovereign debt problem is not being addressed and won’t be until Germany is forced into a position where it can no longer dictate its austerity program for others while maintaining its competitive advantages that were deliberately structured into the Eurozone system.  Money that re-capitalized Greek banks should not be part of the national debt – that releases a bunch of Euro’s, by the way.  Let the European Financial Stability Facility own the banks and do with them what they need to do. 

Everyone, including the Germans, are now talking about a growth strategy.  Well, let’s say growth returns in one or two years.  Until that time there should be no payments required on the loans.  After growth begins to appear, payments can be resumed with a ratio pegged to growth. 

To be clear, I don’t think any of this will happen as Germany, and Germans, seem to forget that their growth is dependent on buyers and as usual are forgetting that their economic strength lies only in exports. Losing buyers in Europe by sticking to an inane austerity policy is just plain stupid.  What they are doing is saving the banks and abandoning the people.

What Germans and the German government refuse to admit is that the Euro ship and its economies are sinking fast and, like the Titanic, it will take down the wealthy and the poor, those who are industrious and those who are not.  Their attitude and solutions are Hooveresque without the quaintness. He and his government, in response to a rapidly disintegrating economy in the US, moved rapidly to reduce government expenditure, and cut wages. He was an idiot then and Merkel and company are the idiots today.

Finally, and what makes the Eurozone almost problematic at this point, is that Chancellor Merkel wants to create a German Europe; every nation should  live, work and apply its governance according to German rulebooks.

Merkel and many (if not most) Germans have an annoying tendency to patronize the southern tier, telling them to “do their homework” for example, so that they can all become good little Germans.  This is nothing more than a tool to bring all of Europe under German leadership.  The word “rule” might be too harsh. Maybe.  However, this makes Germany a threat to the Eurozone and Europe – not Greece, Italy, Spain or Ireland.  So everyone else in Europe needs to decide if they want to live under German leadership or resist.

Merkel keeps saying that she and Germany will do whatever it takes to save the euro; except that every plan presented by others has been vetoed to satisfy German voters, German banks and the German press. Oh, and yes, national interests.

Once More Into the Breach....

On July 1 the new European Stability Mechanism Fund comes into effect.  It is a more robust attempt to resolve the financial crises that has the Euro on the ropes.  But it is also a key date because in June, Greeks will go to the polls again and if they vote the same way, or even strengthen the anti-austerity parties to the extent they can form a government, then after July either the German led team of austerity believers will blink or Greece will set in motion the withdrawal from the Eurozone.   Because, austerity plans are now a social and economic disaster for Greece, Spain and Portugal.  Actually, austerity is not a plan at all – it is a knee-jerk reaction by the rich and powerful to retain that power at the expense of the periphery in Europe which requires a growth plan – not more austerity and unemployment that it brings.

Germany seems to think that threats are the order of the day.  They seem to forget that the Greek voter makes the choices – not Berlin.  Enough economists have said that the German led austerity program is bogus that perhaps Merkel and her ever diminishing circle of allies should sit down and come up with a compromise because by staying in the Euro, Greece will never recover economically because it will be forced to use a foreign currency within a group of wildly differing economies.  The system does not work.

Jean-Claude Juncker, who presides over the Euro-zone's finance ministers, criticized those who seem to think that threats against Greece were appropriate.  He said that Greek voters must be respected.  Mr. Juncker however, is leaving and thus can easily speak his own mind.  The problem is that the other ministers – Finland comes to mind – are fully supportive of the current policy and their tone to Greece is not diplomatic.  This is a gross mistake because people in general don’t respond well to threats and being treated like children. These same ministers praise Ireland and Portugal for keeping to the austerity route. The problem is that Ireland had no sovereign debt crises – it, like Spain is all private debt.  Frankly, anyone who thinks that Ireland is improving or stable is running a high fever. Spain’s banks are in trouble because of a housing bubble that burst in spectacular fashion and an unemployment rate over 25%.  Austerity is not the solution for Spain.

Coming back to Greece though, is the question of who will replace Juncker?  At the head of the pack is none other than Wolfgang Schäuble, the German finance minister and someone heavily invested into austerity and maintaining German export superiority.  Freshly elected Hollande is unlikely to be enthusiastic about having a German in that spot as he campaigned promoting a growth, not contraction policy.  Putting Schäuble into the driver’s seat is likely to send Greece really over the edge.

In June, Europe will know which way Greece is going.  Withdrawal from the Euro will help Greece, hurt banks and embarrass the EU (read, Germany).  But frankly, it will give Greece the chance to become competitive again.  Hopefully, there is a semblance of a plan in place to deal with the exit.

Economic Denial

100,000 peaceful anti-austerity protesters in front of the parliament of Greece on 29 June 2011. (Photo credit: Wikipedia)

Without question, things are getting a whole lot worse in the Eurozone and in Greece and Spain in particular. 

I’ve done a good deal of Germany and ECB bashing, all of it I believe well deserved.  The German solution to everything has been crushing austerity for everyone except the banks while forgetting that their own prosperity is derived from a fixed game where everyone else has to buy their stuff while simultaneously being unable to devalue because it’s impossible to devalue a foreign currency.  I think it is now pretty much settled that the ECB, by concentrating almost exclusively on inflation, has ignored fundamental economic equality and growth factors needed in Europe.  It is also pretty much settled everywhere outside of Berlin that austerity does not produce growth and without growth you get massive unemployment, poverty and social upheaval all of which might lead to the end of the European Experiment.

Angela Merkel is on the way down unless her party changes course. There are hints of that after the recent drubbing of her party in regional elections.  Even Germans are unhappy.  I would assume that someone has a contingency plan for Greek default, unwinding of the Euro in Greece (and perhaps elsewhere) and the cracking of the current economic structure. After all, even the US has a contingency plan for war with the UK.  But don’t count on it because it is very difficult to convince a buyer that he has bought a fake painting despite evidence to the contrary.

The meetings in Greece over the weekend in the desperate attempt to form a government and avoid another round of expensive elections have not gone as planned.  Curiously, what may result in a new election is the support for the moderates, as opposed to the radical left party, because Greeks actually seem to want to stay in the Eurozone.  This is strikingly similar to the former Greek government announcing that a referendum on the agreed upon austerity program would be held to approve or reject it which, at the time, came as a shock to both Sarkozy and Merkel.  That idea was shot down very quickly and publicly leading to the instant collapse of the Greek government.  Now, we are back to the same position, except Germany can hardly object to elections as opposed to an unscheduled referendum.

The austerity plans so far have resulted in extraordinary economic suffering for people who had little to do with the banking crises but who now are expected to pay for it.  The no-growth austerity policy is virtually impossible to implement and if a policy remains that unachievable (and it was from day one) then it is just a Panglossian academic exercise that is better suited for someone’s doctorate thesis rather than the real world.  So, as in war and sports – everyone has a plan until they’ve been hit. The Eurozone has been hit. The getting-up is up to them. 

There was a place called Europe...

The Eurozone problems are getting uglier by the day.  While German politicians have consistently missed – to use Sarkozy’s phrase – multiple opportunities to shut up, Greece is actively engaged in reminding everyone of German bullying tendencies by bringing up events that took place some 80 years ago.  The latest comment from German finance minister Wolfgang Schäuble might not have been taken quite so badly in Greece if it originated from a country with a less  unfortunate (for the rest of Europe) aggressive history.  Even Italy, which has implemented the same system Mr. Schäuble has suggested, would have been a better source. At least the Greeks could ignore an idea from Rome.
 

The suggestion to postpone elections and install a technocrat government is a distinction without a difference from the previous floating balloon out of Berlin that Greece give up its rights to manage its economy to someone in Brussels.  The fact that Brussels was complicit in allowing Greece to play fast and loose with  its economy so long as times were good doesn't bode well for the idea - but that's another story.  

However, the venomous recent exchanges show that there is no “Europe” in Europe.  Citizens in Germany, France, Italy and the other 24 EU members simply do not think of themselves as European first.  Which is why Greece will eventually default and leave the Eurozone – paving the way for the slow motion economic and political unraveling of the EU unless a new approach is taken very, very soon.  In addition, the concept of installing unelected technocrats to run, at a minimum, the economic policies of a nation has been tried before and didn’t go too well by the time it ended in 1991. 

Germany Pushes the Edge - and Loses

Yesterday's revelations that Germany had demanded that Greece surrender its sovereignty to a EU imperial governor again shows that Germany considers itself the ruler of the Eurozone, if not all the EU.  The arrogance - aside from the sheer stupidity which is another matter - should be a wake up call to Italy, Spain and Ireland that as long as they remain "not German" the EU will not fully accept their roles or input.  The Greek reaction was understandably harsh to this suspension of democracy to save the Euro.

The fact of the matter is that Greece is bankrupt.  It does not have a liquidity problem. It is bankrupt and should leave the Eurozone. This would create a good deal a disruption, but for Greece it is a necessary step if it (and countries like it) are not continually subjected to German visions of economic genius which is geared solely to protecting the German export driven economy.  Greece needs to have its own currency again.

Additionally, the German position which seems to rest solely on austerity and no growth, is in danger of sinking the entire EU.  The Hooverism of Merkel and her party is going to destroy the economies of Europe - except for Germany.

Germany - and France at times - have aggressively pushed the concept of austerity-for-all.  At the same time, the ECB has been obsessed with inflation.  The combination is a recipe for a disaster and will not solve the debt crises.

I'm glad I'm not paid in Euro.       

Wheels Coming Off The Europe Train

Almost every day on the BBC – well, no – every day, there is another report on the slow motion train wreck of the Eurozone courtesy of Brussels, Berlin and Paris. OK, Greece has something to do with it, but frankly all the handwringing largely seems to attempt to take attention away from the appalling lack of leadership in the European community.  I actually was told the other night at a café on Rudaki Prospect here in Dushanbe that the entire mess is entirely the fault of Greeks and immigrants (since the speaker was German, I assumed the reference to immigrants meant Turks).  Just close the borders and let every country decide whether the rules for the EU need to be followed if they happen to be inconvenient or disagreeable for a particular country. The speaker was a Phd professor of agricultural economics.  A Very Serious Person.

What crap. Let’s leave the Greek default (which I said would happen) aside and look at the culprits during the past year or so.  We can start with the OECD report last year.

Distilled to its core, it says that some people (presumably five or six economics academics from Pluto) believed that inflation was coming in less than a year. Maybe. The solution was to raise interest rates soon to head off the possible rise in inflation,  which was supported by vague premonitions of something or other.  What about the progressively weakening recovery?  Well – on the slim chance that inflation may rise then kill the recovery with high interest rates.  Oh – and throw in the usual ‘fiscal austerity’ as an added anvil.

And who bought into this – with gusto I might add?  The European Central Bank decided to raise interest rates and became a proponent of fiscal austerity also because, as we all learned from Economics 101, economic growth is the direct result of fiscal austerity in a depressed economy as long as trade surpluses are the norm. For everyone.  What is wrong with these people?

These are bad – but when the IMF steps in, better put away the good silver and call out the riot police.  They not only promote and force fiscal austerity in a time of depressed economies, but clearly don’t care about the pain index.  It’s like they are playing a board game. Somehow, the pain felt by the Greeks is just desserts for cheating to get into the euro zone and trying to compete in the European trade game that was fixed by Berlin to forever favor Germany.   Let’s let the Greeks twist in the wind and conveniently forget that the brilliant economic minds in Brussels were completely fooled by those crafty Greeks way back when the Euro zone really, really wanted to expand.  Sooner or later, given the very stark realities, several countries, including Greece, are going to drop out.

And the Turks, of course, with an average 8% growth rate, are increasingly looking at the EU as an institution that is flailing and faltering and which is not a club they are desperate to join.  If Germany has its way, they will never be able to join despite commitments by the EU.  My suggestion to Ankara – keep pretending that you really want to join. Just don’t do it.

In the meantime, Greece will have a default (a write-down I think is the politically correct term). Then comes Ireland, Italy and Portugal.  The European experiment is coming off the rails.

Crescent Rising - Part 1

Image via Wikipedia

First, a thimbleful of background, as this is not meant to detail the complexities of the rise of the Turkish state but establish their parallax view.
Back in the not so distant past, Turkey towed the line.  As a subservient, reliable partner of the West during the Cold War, Turkey could be counted on to do and say whatever NATO and the US wanted.  Of course, the new nation, founded only in 1922 after the dissolution of the Ottoman Empire and subsequent revolution led by Kamal Ataturk, was less than 25 years old when the Cold War started.   Ataturk, of course, pulled Turkey abruptly into the West and moved its capital from imperial Constantinople to the somewhat desolate Ankara in the center of the Anatolian plateau.  In the process, he stripped away the old imperial trappings and mindset which had brought the Ottomans in on the wrong side of the war, albeit with the significant encouragement of Allied incompetence and, not to put too fine a point on it, British arrogance, adeptly exploited by Berlin.

After the end of the Second World War, during which the new nation of Turkey intelligently remained a neutral, the government – out of historical habit and national interests – moved even closer to the West and became the southern bulwark against the equally new Russian empire now called the Soviet Union.   Turkish foreign policy, dictated by its generals, became whatever NATO and hence US foreign policy, needed it to be.  That was the view from Ankara then.

I suspect one can look to the events of the early 1970s when this easy relationship began to go off the rails in Cyprus as far as Ankara was concerned.  Between 1960 and 1974, Cyprus was a unified republic composed of a Greek majority and Turkish minority, mostly located in the north.  When Greek nationalists began to agitate for annexation by Greece, and complemented their desires with attacks on the Turkish minority (who retaliated at times, but were significantly outnumbered), Ankara became understandably concerned.  Then came the military coup in Greece led by ultra-nationalists which, although a NATO member like Turkey, took a far more aggressive stance toward Cyprus that alarmed Ankara enough to occupy the northern part of Cyprus in 1974.  This was intended as a temporary occupation pending a solution to the crises.  In 1983 the now military rulers in Ankara created the Republic of Northern Cyprus.  The crisis is still pending almost 40 years’ later and temporary has hardened to permanent.

Turkish leadership through this period was anchored on the military which, regardless of the country, is genetically wired not to give up ground.  Ankara’s generals clearly viewed the Greeks with suspicion (a mutual perception), were entirely disinclined to cooperate with anyone over Cyprus (including the UN which wanted re-unification) and anyway, liked their new base in the Eastern Med.  

Turkish attitudes and interests changed dramatically with the election of the AKP in 2003 and the move toward integration with the EU which considered the division of Cyprus with some distaste.  As far as the AKP was concerned, they went above and beyond to please the EU.  Unfortunately, the EU  was, to say the least, unresponsive and Turkish attitudes have been formed by that lack of EU approval to Ankara’s efforts - in full – to support to the U.N. unification plan proposed by the then secretary general Kofi Annan.  Unsurprisingly, nationalists in both Ankara and Nicosia were infuriated with the idea that there might be some solution.  There was no reward for the efforts by the AKP and Turkey to accept the UN plan and when a referendum was held in Cyprus, which would have resulted in re-unification, the Turkish population voted overwhelmingly to support it while the Greeks rejected the plan.   Shortly thereafter, the EU welcomed the Greeks who voted “no” into the EU club proving to Ankara that, as far as they and Europe were concerned,  no good deed goes unpunished. 

Ankara’s growing, but still reversible assessment by 2005 was that if it followed the rules of the club it was trying to join, its reward would be rejection. Even by 2003 It was feeling far more confident politically and economically – a trend which began before the AKP took power and originated around the time of the abrupt collapse of the Soviet Union. Turkey viewed that particular event as an opportunity for itself – not NATO or the EU.  It rapidly increased its presence in the former Soviet colonies in Turkic Central Asia and Azerbaijan.  It ramped up trade and investment with both the Russian Federation and Ukraine and extended its diplomatic clout regionally.  Turkey was looking out for its interests first.  The Cyprus problem, largely a result in its view of broken promises by the EU, began the ascent to regional power.

This brings us to the recent past and the next post on the view from Ankara.

Thoughts for the Day

Image by Getty Images via @daylife

Before moving on to discussing the new, old world order two thoughts for the day:

1.  Is anyone - except right wing troglodytes - upset about what is happening to the troglodyte in chief Rupert and his mini-trog son?  Bring it on and bring him down.
2.  Germany's attitude toward Greece and the future of the Eurozone, not to mention the EU, is a direct example of my new, old world order.  But then, what do you expect from a country which just awarded Vladimir Putin a coveted prize by ignoring his destruction of the fledgeling Russian democracy?

Eurozone Slow-motion Train Wreck

If anyone thinks that the Eurozone is under control, they need to take off the blinders. Greece is, to use a technical term, a mess. It does not have the political ability to effect the changes needed. It is not only insolvent, but illiquid. This is a fundamental, terminal problem. After Greece came Ireland, then Portugal. The elephant in the room is Spain and it may be next. The entire Eurozone is a slow-motion train wreck and that fact is beginning to sink in. If all the other reports of disintegration were not enough, this latest from Martin Wolf in the FT slams the door.

I just want to add a point from a political angle. If there was a component adding to the crises, it is the positions taken by Germany which, with the help of its elected officials, have demonized those countries unfortunate enough not to be German. The desperate political campaigns of Merkel and her party to channel and support arrogant and Germany-first attitudes have severely damaged the idea of Europe. The public statements of German government officials at the highest levels regarding Greece, for example, have damaged the integrity of the EU. 

The crisis is getting worse, not better.

China to the Rescue

The recent announcement by China that it would buy Greek bonds when they are issued, likely early in 2011, and to double bi-lateral trade is definitely good news for Athens. It is also an interesting maneuver by China to gain influence within the EU as a whole through bi-lateral agreements with individual members that expose fault lines in attempts by France and Germany to impose a uniform foreign policy. 

Bi-lateral agreements with individual members of a bloc can provide significant leverage. For China, this form of diplomatic initiative will assist in lifting the EU ban on certain high-tech exports to China and for the EU to recognise China's market economy status, a long-standing request that would limit the EU's room to impose anti-dumping duties on Chinese imports. 

Will other debt burdened EU members turn to China as the financial saviour?  If so, then the results of bad financial policies in the EU and the US will very much affect global relationships in an unanticipated way.  As the US devolves toward banana republic status under control of its Republican and teabagger overlords and the EU struggles with the increasingly worrisome single currency, the balance is tipping.

Overcoverage of Issues and Events

I have to admit that I’ve been lax in posting. There are two reasons for this outside of the need to actually complete some work. The first is the extreme obviousness of many topics and issues about which I could write if they were not so obvious, and the second is the useless warnings that bubble up about the necessity to deal with these issues to avoid the giant rocks from space that are sure to obliterate the planet if we don’t solve the problem NOW - but, well - let’s just list a few…


Israeli intransigent refusals to deal with any issue to move the region closer to peace,

Iranian intransigent rejection to agree on any solution dealing with anything,

Somali pirates seizing yet another ship (and being paid-off),

German pronouncements on their superior work ethic versus everyone with a shade darker skin colour

Greek worker riots as a result of reduced payments for doing nothing anyway,

Spanish riots as a result of Greek riots and 40% unemployment among youth,

French riots as a result of being French,

G20 meetings,

G8 meetings,

G pick-a-number meetings,

The imminent implosion of the Euro and the end of civilization,

North Korean insanity

In that light, a hat tip to Drezner for posting this:

An ineffectual international organization yesterday issued a stark warning about a situation it has absolutely no power to change, the latest in a series of self-serving interventions by toothless intergovernmental bodies.

“We are seriously concerned about this most serious outbreak of seriousness,” said the head of the institution, either a former minister from a developing country or a mid-level European or American bureaucrat. “This is a wake-up call to the world. They must take on board the vital message that my organization exists.”

The director of the body, based in one of New York, Washington or an agreeable Western European city, was speaking at its annual conference, at which ministers from around the world gather to wring their hands impotently about the most fashionable issue of the day. The organization has sought to justify its almost completely fruitless existence by joining its many fellow talking-shops in highlighting whatever crisis has recently gained most coverage in the global media.

“Governments around the world must come together to combat whatever this year’s worrying situation has turned out to be,” the director said. “It is not yet time to panic, but if it goes on much further without my institution gaining some credit for sounding off on the issue, we will be justified in labeling it a crisis.”

The organization, whose existence the White House barely acknowledges and to which hardly any member government intends to give more money or extra powers, has long been fighting a war of attrition against its own irrelevance. By making a big deal out of the fact that the world’s most salient topical issue will be placed on its agenda and then issuing a largely derivative annual report on the subject, it hopes to convey the entirely erroneous impression that it has any influence whatsoever on the situation.

The intervention follows a resounding call to action in the communiqué of the Group of [number goes here] countries at their recent summit in a remote place no-one had previously heard of. The G[number goes here] meeting was preceded by the familiar interminable and inconclusive discussions about whether the G[number goes here] was sufficiently representative of the international community, or whether it should be expanded into a G[number plus 1, 2 or higher goes here] including China, India or any other scary emerging market country that attendees cared to name.

The story was given further padding by a study from an ambulance-chasing Washington think-tank, which warned that it would continue to convene media conference calls until its quixotic and politically suicidal plan to ameliorate whatever crisis was gathering had been given respectful though substantially undeserved attention.

I'll be back soon  with a post on one or more of the topics listed above. Or maybe something not sufficiently covered by the MSM.

International Relations Stupidity

Some examples today of total stupidity in international affairs:

1. The Armenia Genocide Resolution passes by one vote in the US. A grand victory for those comfortable Armenians in California who want to alienate the most powerful, democratic ally of the US in the region and destroy the reconciliation process between Turkey and Armenia in order to recognize an atrocity that happened under a completely different political structure almost a century ago and has nothing to do with Turkey. Maybe the US should now demand that Armenia break its alliance with the Russian Federation and expel its army.

The next resolution should be one that condemns Syria for the genocidal atrocities committed by Ashurbanipal, king of the Assyrian Empire against anyone he cared to roast alive including, in no particular order, Egypt, Iraq (then known as the Babylonian Empire) and Jordan(then part of the Elam Empire right next door that was essentially wiped out).

While we are at it, it was not so long ago that Italy burned Jerusalem and beseiged Masada. Apologies and reperations to Israel are required.

Last, but certainly not least, the US Congress should admit to its genocide of Native Americans. Oh, wait - they don't have a massive lobby or donate hugely to campaigns. Sorry.

2. Germany, that past paragon of virtue and peace, has suggested that Greece sell off its assets - particularly its uninhabited islands - to settle its debts. Let's see - this from a country that killed 400,000 Greeks between 1940 and 1944 and stole most of the money from the Greek banks. I guess Merkel needs a warm place to retire and will buy low, sell high.

3. Hillary Clinton, whom I otherwise support, delivered a remarkable statement in a news conference with Argentine President De Kirchner. The remarks from both to questions are as follows:

QUESTION: (In Spanish.)

And for the Secretary, it’s about the Falklands. The – President Fernandez talked about possible friendly mediation. Would the U.S. be considered – would the U.S. (inaudible) consider some kind of mediation role between the UK and Argentina over the Falklands? Thank you.


SECRETARY CLINTON: ...we want very much to encourage both countries to sit down. Now, we cannot make either one do so, but we think it is the right way to proceed. So we will be saying this publicly, as I have been, and we will continue to encourage exactly the kind of discussion across the table that needs to take place.

Um. Well, no. The UK has said very clearly that they do not intend to discuss the status of the Falklands so there is no possibility of sitting around a table to discuss that. Furthermore, no one living on the islands is interested in becoming Argentinian. There is no reason for the US to become involved and this statement is not helpful in the least and makes it look like a) the US can negotiate a settlement of territorial dispute that one side - a strong ally - has no intention of discussing and b) the US supports the Argentine position. Next time just say the US has no position.