Bottom Line:  Markets showed impressive resilience in the face of a range of geopolitical shocks in 2016, but recent market moves suggest this year could be different. A greater range of possible, if…

Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn argues that the European Union (EU) faces rising populist pressure, reflecting long-term challenges to economic policymaking that can only partly be addressed by a cyclical recovery and debt relief. By strengthening the credibility of economic policy and the region’s resilience to shocks, better policy coordination and a faster path to economic union would go far toward securing a better economic future for Europe and addressing some underlying causes of populism.

Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn writes that Greece and its creditors are again locked in a showdown over reforms, cash, and debt relief. Another cliff-hanger ahead of heavy July debt payments looks likely. Extend-and-pretend is a dead end for Greece and an increasingly populist Europe, and a more ambitious agreement seems ruled out by bailout fatigue in creditor countries. Markets are once again underestimating the risks of “Grexit.”