EURO CRISIS: THE FUTURE OF THE EUROPEAN UNION
EURO CRISIS: THE FUTURE OF THE EUROPEAN UNION
Principal argument: The future of the European Union is in peril. There exists a magnanimous rift between debtor and creditor countries. The financial crisis in Greece seems to be the last straw in the coffin for the Eurozone. For the union to survive, it requires to overhaul its resent policies in favour of new ones. This action will not only spur economic growth in all the countries in the region but will also save the union’s existence.
The crisis; origin and possible implications
- The EU is the only embodiment of a successful and joint monetary union having a common financial objective. It was established to ensure economic growth in the member countries as well as to open up new trade opportunities for the said countries (McNamara, 2015).
- Trading as a bloc strengthened the member countries enabling them to enjoy the advantages that came with it. However, the global economic crisis that occurred in 2008 altered the trajectory of some of the member countries plunging them into debt and economic deterioration. The countries most affected were Greece, Portugal, Italy and Spain.
- At the same time some countries in the union were not affected by this crisis and instead recorded economic growth. These countries included the hegemons of the union such as Germany and the UK. As a result, a rift ensued between these countries with the increasing debt burden. The culmination of this matter was the Greek financial meltdown (McNamara, 2015).
- Due to the financial situations of these countries, the only other possible solution would be to leave the union. Ironically, this move will not only affect the indebted countries but also the creditor nations.
- Countries such as Greece will lose all the assets they accrued over the period they were members of the union. In addition to this they will lose he backing of the union, which will affect their trading, prospects. On the other hand, the creditor countries will also suffer, as the value of the euro will drop affecting their investments.
Problems and probable solutions
- The EU structure is one of the challenges facing the union. For its survival, it requires political integration along with fiscal consolidation. The union is currently a centralized monetary authority, but it lacks fiscal and political integration. This may be the reason the rift between the debtor and creditor countries has intensified (McNamara, 2015).
- The union also lacks proper leadership. Creditor countries, most notably Germany, have failed in their responsibility to offer direction to other countries, which has contributed to the euro crisis.
- Germany should take up the mantle and direct the other countries to ensure mutual economic growth in the region. This will even the competition filed among the countries and will save the EU.
- In addition to this, the region needs to incorporate political integration in the EU structure. This is opposed to the current rhetoric of self-governance that resonates with some countries such as the UK.
- The current situation can be salvaged and future crises averted by a change in the structure of the EU.
- Creditor nations particularly Germany need to make a decision, to either leave the union and watch it crumble or to remain and lead it. Leaving the union would expose the creditor countries to serious losses due to the depreciation of the euro.
- Alternatively, by remaining, Germany will safeguard its investment while ensuring economic growth in all the countries. As a result, the competition between the debtor and creditor countries will be equalized. This will ensure that the debtor countries have enough economic growth to pay off their debts while having enough left over for national development. (Soros, 2012)
- As a result, the union to achieve its original objective of ensuring even economic growth in the region as well as improving trade.
- Therefore, the future of the union largely depends on the decision Germany makes; to pull out of the union or to stay and offer leadership in a bid to improve the financial sustainability of the Eurozone (Soros, 2012).
McNamara, K. (2015). The Eurocrisis and the Uncertain Future of European Integration. [online] Council on Foreign Relations. Available at: http://www.cfr.org/world/eurocrisis-uncertain-future-european-integration/p22933 [Accessed 20 Dec. 2015].
Soros, G. (2012). The Tragedy of the European Union and How to Resolve It. [online] The New York Review of Books. Available at: http://www.nybooks.com/articles/2012/09/27/tragedy-european-union-and-how-resolve-it/ [Accessed 20 Dec. 2015].