I sat down with Fred Kempe yesterday to talk about the impact of the EU debt crisis on the United States as part of our research for a larger article. Kempe is president and CEO of the Atlantic Council, a nonpartisan institution devoted to promoting transatlantic cooperation and international security.

Here at FreeEnterprise.com, we decided to probe the issue of the EU debt crisis after a June poll of our readers showed that 65% of them are very concerned about the impact of the EU debt crisis on the U.S. economy and another 31% are somewhat concerned.

Kempe had this to say about the geopolitical impact of the debt crisis:

“It could turn a very fragile global recovery into a slowdown or even a global recession. We have a strategic stake in Europe … if suddenly Europe is a mess and is looking internally for the next decade or two decades, that means the U.S. is not going to have a partner on the world stage at a time of huge historic changes. There are huge consequences for the U.S. capability to get things done on the world stage as our relative influence declines.”

On the economic impact:

“If you had a Lehman-like crisis growing out of a French or Spanish banking insolvency, it would be far larger and more far reaching than the Lehman crisis was ... What Americans very often forget is that the European economy, if you take it in the aggregate, is the largest economy in the world. If you have a recession in that economy, you’re going to feel an impact in a lot of different places in the world.”

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“For some American businesses, [the European debt crisis] is going to cost them a significant export market. It could cause the dollar to rise in comparison to the Euro. In general, it could influence nervousness of bankers and those extending credit.”

On how to resolve the crisis :

“The first thing Europeans have to understand is that they have to throw more at it than they have. What we have to understand is that it is much harder for Europe to do that. If you think about how difficult it was for us to rise up to our challenge, think about 27 different countries, each with governments that need to get re-elected. I’ve talked to European leaders about this, and they say, ‘We know what needs to get done, but we just don’t know how to do it and get re-elected.'”

On the prospects for resolving the crisis:

“In the short term, I’m pretty concerned because when you have a currency union with such a gap in global competitiveness between the northern countries and the southern countries, the only way the currency union works is if the northern countries are continually transferring to the southern countries. But domestically and politically, that’s harder to sell. How do you sell to the honest German taxpayer and the German who is getting retirement at age 65 or 68 that he should bail out a Greek who is retriing at age 55 and not paying his taxes? So I think we’re far from the end of this crisis.”

On the difference between U.S. and European debt issues:

“There is one radical difference between the U.S. and Europe. We have a crisis within an established economic, financial, and political system. They have a crisis without an established financial system. They are trying to build the system within the crisis, and therefore their situation is a much more perilous and existential one than ours is ... Who actually runs Europe? It's caught somewhere between intergovernmental and intragovernmental [governance]. So Europeans are really going through a identity crisis even as they go through an economic and debt crisis.”

On why the United States should forge stronger economic ties with Europe:

“Because we did the right thing after World War II, we achieved what I think is one of the greatest accomplishments in the history of American foreign policy – establishment of the European coal and steel community, the establishment of NATO, and the bringing about of peace and reconciliation in Europe. To say that we shouldn’t forge a tighter relationship with Europe now is saying that we were wrong after World War II. Whether or not the eurozone stays together in its current form, whether or not Greece stays in the euro, whether or not Europe solves all of its problems right away, an economic and trade pact makes a lot of sense. It’s in our competitive interest to do it.”