Someone told me that one of the biggest advantages of the European Union in terms of economics was the fact that it was diversified. It was a loose union that consisted of vastly different economies from the industrial Germany to the agricultural Italy. If one country’s economy was in trouble, the Union as a whole would be undeterred, and other countries could come to the ailing country’s aid.
It seems the above theory, however, may be a little off the mark. The European economic crisis started with Greece’s debt skyrocketing rapidly at the end of the 2000s, with its main industries, shipping and tourism, sensitive to changes in economic well-being. As with most countries, Greece’s government had a false sense of security, running a large deficit when its economy was growing at an annual 4.2% and its bond yields decreasing. Throw on corruption as well and there is a recipe for disaster.
Greece has pretty much been the centre of attention in terms of European affairs these days, but it’s the bad kind of attention. Despite the efforts of the recently-former Prime Minister, George Papandreou to deal the situation by implementing austerity measures, wide-spread protests and the failure of France and Germany’s continued bailouts to alleviate the problem have ended up turning the Greek economic crisis into something of an economic Black Death.
Papandreou, despite surviving a confidence vote, has stepped down in favour of a national-unity government. Silvio Berlusconi, with his gaffes, flings with certain women, and his penchant for saying the most outrageous things, finally caved in and has now resigned. Even before the toppling of Greece’s and Italy’s leaders, Portugal had a bit of a problem, finding themselves bereft of a government for a few months.
The European Union seems to be having a bit of an identity crisis. Just what exactly defines the union of twenty-seven countries? The fact that they’re European? The fact that they managed to achieve something that has not been achieved since the Roman Empire? Instead of co-operating, there is only dissent within the ranks of the European upper echelon. David Cameron, and even Ed Miliband have criticised the fumbling with the Eurozone, with the former saying the European legislation is pointless. Sarkozy told Cameron that he lost a good opportunity to shut up, with Berlusconi saying that the Euro is a disaster that has screwed everybody.
The fact that the Euro single currency is coming under fire from not only the traditionally more Eurosceptic United Kingdom but also countries within the Eurozone shows how the currency is not bringing the states together, but pushing them further apart. Instead of encouraging other countries to adopt the Euro, with countries like Slovakia recently adopting the currency, there has been talk of having Greece leave the Euro and taking up the Drachma again at a debased value. What is more astounding is that, in the wake of the political crises in Italy and Greece, French and German officials have begun preliminary talks of breaking up the Eurozone altogether.
In spite of recent advances, such as the shoe-horned Lisbon Treaty, bypassing the Irish referendum by having the Irish people vote on it again, the European Union is not expanding. As a matter of fact, it’s contracting.
The European Union is beginning to look less like an inclusive group that brings the disparate countries of Europe together and is beginning to look more like a hierarchy with France and Germany at the head, with the other, smaller countries either nodding their heads or begging the former two for help. It’s reminiscent of that Toy Story 3 scene where the European Union is Sunnyside Day Care and France and Germany are collectively Lotso. Of course, France and Germany are doing their best to keep the European Union together, and they have contributed a lot to the well-being of the union, but there is nevertheless the unspoken fact that they are somewhat in charge of the whole thing.
While many British people may rejoice at the possibility of the Euro collapsing, they will have to take into account that their economy is actually dependent on the Eurozone, whether they like it or not. If the Euro does indeed collapse, with Greece defaulting, other countries would follow. British banks with investments in Greece and other countries vulnerable to the crisis would find themselves with less money on their hands, causing another credit crunch. Without the Euro, the market would become wildly unpredictable with each country’s economy either flourishing or devaluing rapidly.
Jose Manuel Barroso, the President of the European Commission said that Europe is in a defining moment where it will either unite or face irrelevance. With a currency that was once fast expanding into new expanding on the brink of collapse and with the economic crisis bringing an end to not one but several people’s political careers, these are indeed interesting times for not only the European Union, but Europe itself.
Image Credit- Eric Chan