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Is Europe really on the brink?

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That is precisely what the best and the brightest have said in interviews in Germany, France, and Britain in recent months. Because this is a political crisis more than an economic crisis, Europe only has to take the next step in its historic process of integration. The problem is that integration, at bottom, means a sharing of debt – and this is where everything turns nationalistic.

What the current crisis exposes is the incompleteness of the 1999 creation of a common currency, the euro, without a common fiscal policy. A fiscal policy would require mutual obligations. Europe has, in effect, a "dollar" without a Federal Reserve.

That leaves the 17-member eurozone in the equivalent position of a US in which the states share the greenback, but each state rises or falls on its own – as if there were a Maine dollar, a Florida dollar, or a Texas dollar. EU states that are weaker, or face bad times, are left to fend for themselves. They are chained to the euro without the ability to devaluate.

The euro was fine in good economic times; its "flaws" have only shown up since the 2007 debt crisis. "They set up, with the euro, an arrangement they have to complete or it will fall apart. And if it falls apart, what then?" asks Philip Whyte, a senior fellow at the Centre for European Reform, a think tank in London. "The eurozone is a pillar of the EU. It is hard to imagine it can collapse without damage to the EU."

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