Effects of Euro Zone Crisis
Known as a huge market for businesses from China, the United States, Russia, India and Japan among other economic world powers the Euro affects all these economies. The Euro crisis will affect the economies of countries for years to come and the underlying causes like the competitiveness of southern Europe cannot be solved overnight.
Spain, Italy, Greece and Portugal face many years of low growth, public spending curbs and possible social unrest. People on other continents are wondering whether the crisis will last forever and think that the European Union is hesitant to find suitable solutions. Because of the crisis, the global standing of the EU has been damaged and it no longer has the ability to act in an effective manner.
Because of the crisis, there has been arguments on when and how Greece should be bailed out. Other countries that require assistance have worsened the relationship between Germany and France. Germans are pushing for stricter guidelines on the issue of budget deficits and severe penalties for those countries that borrow a lot.
In addition to this, they have also talked about new treaties that will allow miscreants expulsion from the Euro zone. The French on the other hand have placed emphasis on the need of governments to discuss the policies of other countries, their performance and imbalances within euro zone. The government has opposed the signing of a new treaty with Berlin and France clashing over whether the IMF should be involved and whether the ECB (European Central Bank) should consider buying government bonds and if the key economic governance forum should be the wider European Union or the euro group.
Another effect of the Euro zone crisis is the Greek crisis which has highlighted the growing isolation of Germany within the European Union. Since reunification, Germany has asserted its interests in a more assertive manner in the same way that France and Britain do. In the enlarged European Union members of twenty seven members, German leaders don’t assume what is good for Germany is necessarily good for the EU and the reverse is also true.
The Brussels Commission has also weakened as a result of the euro crisis yet its power is relative to that of the EU member governments. When the crisis struck in 2008, the EU’s response was influenced by the larger member states. The EU has also become retrospective as a result of the euro crisis.
Calls to change the treaty in the last 10 years had forced leaders in the EU to spend a lot of their time on procedures and institutions yet, many had hopes that the Lisbon treaty would make it possible for the EU to focus on major global challenges such as China, Russia, climate and energy.
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