European leaders converged in Brussels to figure a way out of a worsening debt crisis and agreed to greater financial oversight and centralization. England refuses to go along with the plan, and Stanford political scientist Francis Fukuyama says he expects some countries will start bailing out of the eurozone.

“The political difficulties of deepening any fiscal union are so great that I wouldn’t bet on that happening,” says Fukuyama, the Olivier Nomellini Senior Fellowat Stanford’s Freeman Spogli Institute for International Studies and a resident at FSI’s Center on Democracy, Development, and the Rule of Law. “The easier path is going to be for countries to begin exiting.”

Fukuyama talks about the summit, the euro’s chances of survival and what’s at stake for America if the currency collapses.

What does the Brussels agreement mean for Europe’s debt crisis?

We will have to see how much of a binding constraint this agreement actually is. It’s just an informal agreement at this point. Political leaders can promise anything at this kind of summit and fail to deliver.

I think the most interesting thing going on is the eurozone – the 17 countries that participate in the euro – is actually splitting off from the greater EU. The reason that’s happening is that in order to save the eurozone, they need to make certain decisions on this type of deepening control. And countries like Britain will never go along with this. The 17 countries have to create their own unit that can make decisions at the expense of the larger EU.

Explain Britain’s refusal to have its budget reviewed by the European Commission

The UK is like the United States – they’ve always been jealous of their sovereignty. If you go to England and talk about crossing the Channel, they’ll say, “Oh, so you’re going to go to Europe.” While an American would say “England is a part of Europe.”

There’s a strong strain – especially within the conservative party – that really does not want to give up authority to what they regard as a bunch of French socialists in Brussels. That’s their vision of what the EU really represents. So they’re resistant about being dragged into any German scheme to deepen the powers in Brussels to include control over national budgets because that is a core element of sovereignty. The majority of people in Britain will say that will happen over their dead bodies.

What is the likelihood that countries will begin exiting the eurozone?

I don’t think it makes sense for a country like Greece to stay in the eurozone. It’s a matter of national pride that they don’t want to be the first country out, but it’s very hard to see how they actually return to growth under a system that links them to Germany in terms of the price of their currency. Long before there’s any kind of centralized fiscal reform that’s imposed on Greece, Portugal and these other peripheral countries, I think it’s more likely that they’ll exit. The euro will probably remain, but it will be at the core of the more stable countries.

What mechanism is there for countries to exit the eurozone?

There is no mechanism. Not only is there no legal way of exiting, there’s no disciplining mechanism. You have a stability pact where countries agreed they wouldn’t run a budget deficit greater than 3 percent, and Germany was really one of the first counties to violate that. But there were no sanctions. That’s the problem right now – there’s neither discipline nor an exit mechanism. That’s why everyone is fearing a disorderly, messy breakup of the EU, which would be extremely damaging.

President Obama has said the U.S. “stands ready to do our part" to help Europe resolve its crisis. What can America really do?

It’s an indication of how far we’ve fallen, but there’s really nothing concretely we can do apart from possibly increasing our International Monetary Fund share. But the IMF doesn’t have the ammunition to really help at all in this particular crisis. So all we can do is sit on the sidelines and try to get the Europeans to take our advice, which a lot of them are not inclined to do given the mess that happened on Wall Street three years ago. It’s a mark of the diminishment of overall American influence that we’re simply relegated to the sidelines of this crisis.

What’s at stake for America in the wake of a total European financial meltdown?

There’s a lot at stake. We are slowly crawling out of the biggest recession since the Great Depression. The one thing that could really send us back into a second leg of a recession is collapse of the European financial system and panic in Europe. If Europe doesn’t do well, the United States isn’t going to do well.

Silvio Berlusconi has been a force in Italian politics during the past two decades. As the country’s prime minister and richest man, the media mogul managed to slip through sex scandals and criminal charges only to be forced out of office by Europe’s debt crisis.

As a new government led by economist Mario Monti takes place, Ronald Spogli talks about Berlusconi’s fall, what’s next for Italy and whether the United States should get involved in the eurozone’s tailspin. Spogli, who served as the U.S. ambassador to Italy from 2005 to 2009, is a Stanford trustee and major benefactor to the university’s Freeman Spogli Institute for International Studies.

What will Italy’s government look like under Mario Monti, and how will it trim the country’s $2.5 trillion debt?

Monti is an economist by training and has been president of Bocconi University, Italy’s most prestigious business school. He was the European Commissioner and that position earned him international influence and experience. So here’s somebody who has economic savvy, institutional gravitas, and the ability to be perceived as above politics.

The new government is expected to carry out the stability program enacted immediately before Berlusconi’s resignation on Saturday.  This law contemplates asset sales to reduce debt, among other measures.  The idea of a wealth tax has been floated in Italy – which by most measures is the richest country on the continent – as a way to immediately and significantly pay down the nation’s debt. 

The Monti government is likely to consider this and other options to reduce the country’s indebtedness.  However, it will have to gain parliamentary approval for any new laws. And depending on the nature of the bill proposed, passage of legislation could prove problematic.

How did Berlusconi manage to survive sex scandals and corruption charges, only to be brought down by Italy’s financial crisis?

I think he survived because for most Italians, his personal life was less relevant than his actions and promises as a politician who could do good things for Italy.

He came into power in 1994, and his ability to dominate Italian politics for nearly two decades has been the main story. He came in with an expectation that as Italy’s richest man and as a successful businessman, he would help jumpstart a country that had begun to stall economically. The notion was that after stagnation had begun to creep in, Silvio Berlusconi was the person to break the logjam and move Italy forward.

But for the last 20 years, Italy has had half the economic growth rate of Europe. That’s the biggest issue against Berlusconi. But nobody is 100 percent convinced that he’s really gone for good. He has an amazing ability to resurrect himself. He’s proven that throughout his political career.

How does Italy’s debt burden fit in to the rest of Europe’s economic woes?

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In terms of the sheer magnitude of the problem, the Italian circumstance dwarfs Greece’s situation and the ability of the initiatives meant to deal with other countries’ crises. The issue is whether the new Italian government will be able to calm the bond markets.

Restoring credibility is absolutely vital. The fundamental concern is that there’s no offered solution to an Italian debt problem. There is no bailout being contemplated that’s big enough to be able to deal with the issue, unlike Greece.

The euro crisis has claimed the political lives of prime ministers in Greece, Spain and Italy. Can we expect more high-profile political casualties?

It’s interesting how the markets – in such a short period of time – have forced a political change that the internal Italian political system has been unable to achieve for quite some time. It’s difficult to speculate as to whether those forces will move to more counties. But it certainly wasn’t contemplated that they’d have this impact on Italy, so its fair to say that nothing is completely off the table.

In the United States, candidates vying for the Republican nomination in next year’s election say America shouldn’t get involved in Europe’s financial mess. Is that the right attitude?

Europe is extremely important to the United States. Not just for economic reasons, but for political reasons. This is a European problem to solve. On the other hand, if it gets to the point where it continues to have a very damaging impact on the world’s capital markets, I think the resolve to keep it as an isolated problem may fade.

Beyond the narrowly defined economic impact of the crisis, we have many issues of global security that we cannot effectively deal with without the help of Europeans. If they’re going to go into a pronounced period of economic contraction, that’s going to heavily impact their ability to be a great partner for us.  Italy is a perfect example of this concern. We counted on its help in the Balkans, Afghanistan, Iraq and Lebanon. Those are expensive missions, and if the country doesn’t grow its economy, it’s harder for them to be a great American ally.  Italy’s economic situation extends to our basic international security interests.

Italy's economic crisis is the subject of a Nov. 18 presentation given by Roland Benedikter, a scholar at FSI's Europe Center.