Crisis, crisis, there is a crisis! Europe is facing a confidence crisis and nationalistic temperaments are making it worse. We are neglecting other important issues going on in Europe and in the world. And it is all because of the “Eurocrisis”.
Eurocrisis – A fuse for disunity in Europe
The future of Europe’s joint currency has been heavily contested, with just about everyone having an opinion on who will leave the eurozone first and who will stay. For some members, national interests are prevailing over the well-being of the EU. The Eurocrisis has shown how nationalistic temperaments are dividing the Union and the idea of a financially stable Eurozone as political leaders have been struggling to reach a compromise to end the crisis.
Angela Merkel, the German Chancellor, has maintained that a solution to the crisis can only be reached with bold reforms and punishment for Eurozone members who do not follow through. However, the proposed reforms such as implementing spending cuts and raising taxes have pushed the Greek economy into a recession, exacerbating the problem. Some also complain that the rhetoric during the management of the Eurocrisis creates a differentiation between “first-class” and “second-class” status among member states.
Germany, Europe’s biggest economy, has rejected the idea of using eurobonds to buy government debt through the European Central Bank. The fear is that struggling member states would avoid the implementation of necessary reforms and instead rely on the EU’s strongest economies to keep their access to bond markets. Such a scenario would increase borrowing costs for the eurozone’s top countries while borrowing costs would be reduced for countries like Spain and Italy. Then, motivation for struggling countries to reduce spending, as well as pressure to implement economic reforms, would stagnate. Such solutions to the crisis have been intensely debated and the lack of agreement on any solution shows how the crisis has led to national interests prevailing over the unity of the EU. Member states are exercising their own sovereignty in the crisis and are obliged to follow their own sets of national interests.
Prospects for the euro’s survival are grim – but what does that mean for the European Union itself? Would the Union survive even if the euro failed? The EU was rooted in the idea of a political and economic alliance to ensure and support peace and stability. Having only a (staggering) common currency and no constitutions, it is problematic, to say the least, for the EU to remain a political union and a global influence. The longer the EU financial crisis drags on, the more detrimental it is to the international image of the EU. Without sustainable answers to the financial crisis being provided, the EU’s credibility and unity has been questioned and the EU risks becoming less influential and persuasive on the political field. Instead of dealing with one voice of Europe, external partner countries are dealing with many individual states, with many voices that are acting on their many different national interests.
Without sustainable answers to the financial crisis being provided, the EU’s credibility and unity has been questioned.
At the annual G20 Summit, the Eurocrisis has taken up all the limelight. Other pressing human crises, such as food security, green growth, financial regulations etc are put on a back burner. Instead of trying to figure out how to stop conflicts in countries such as Syria or finding solutions for climate change, energy efficiency and sustainable development, government representatives in the G20 gave priority to finding a sensible, timely solution to the Eurocrisis. If the crisis continues to be unresolved, it will impose costs on the rest of the integrated global economy.
The Eurocrisis has led to a problem of a lack of confidence for the EU, yet a determined and united Europe is exactly what is needed to calm the financial markets. Together, the EU’s member states are without question one of the world’s strongest powers – but if leaders keep trying to solve the crisis via individual national approaches, there will be no Europe left.