University

The radical economic and political reforms required to solve the Eurozone crisis inevitably means the break-up of the EU.

In Europe in 2009, fears among Conservative investors arose over a possibility of European sovereign debt crisis. The situation intensified in 2010 when Greece suffered from a debt crisis, where the Greek economy had reached a breaking point after years of fiscal irresponsibility. Most notably the revelation the Government of Greece had pain banks such Goldman Sachs had been pain hundreds of millions of dollars to aid the misreporting of economic statistics so consecutive Greek government were able to hide their actual deficit from the EU. Hence resulting in the EU providing a rescue plan for Greece. Than Ireland. Than Portugal. And now Greece again. All of these events has pushed the Eruozone to its limit with the value of the Euro decreasing and credit ratings declining. Now we argue to solve the Eurozone crisis, the radical reforms needed to solve the crisis will inevitably break up the EU..

When we say the EU will break up, we do not meant the definite end of European integration and cooperation. We meant the end of the European Union in its present form as a supranational economic political body. We believe the radical economic and political reforms required to solve the Eurozone crisis will change the dynamics, structure and relationship between states in Europe from the Monett-Schuman desire on integrated united European economy to Europe which is places an emphasis on confederalism. We believe the reform needed to solve the Eurozone crisis would a split in the EU which would create two blocs. This would lead to the creation a new currency union, an uber Euro, led by Germany and other European countries that have a positive current account balance, such as Denmark, Norway, Sweden, Netherlands, Austria and Finland. The withdrawal of the German led bloc gives a French led euro greater flexibility to keep interest rates low, to engage in qualitative easing and job creation programmes to develop growth. The French-led Euro bloc can improve its status as a reserve currency by combining current account deficits to increase overseas usage. Ultimately this split bloc plan goes a relatively long way in tackling the main criticism of the Euro where presently seventeen states use the same currency but have varying domestic fiscal policies. Hans-Olaf Henkel, the former president of the Federation of German Industries, has advocated the split bloc initiative , believing it reflects well on the differing cultural mentalities of the two blocs, the German-led “whose adherence to monetary stability and budgetary stability would be represented by the hard northern euro,” whilst for the second bloc centred around France, “whose soft variant of the euro would reflect their free-spending mentality and talent for monetary improvisation.”

The bloc system would mean the leadership of the EU would change from the German-French almost duel leadership would transform to Germany and France leading their own bloc. Thus giving greater flexibility to dynamic political leadership. The leadership shown in the Eurozone crisis has been rather standstill for example the varying opinions of Chancellor Merkal and President Sarkozy to let Greece default. And leadership from present EU institutions has been somewhat weak, rather than Commission President Barroso leading a supranational rescue, the reality shows intergovernmentalism being preferred by Germany and France.



Presentably to solve the Euro crisis, a significant rethink is needed in how to manage European integration. And we believe the rethink needed will mean the EU as know it now will demise. In the short, it looks the European project will still continue with the quadrupling of the EU rescue package in The European Financial Stability Facility (EFSF). However it feels like the EFSF is merely an immediate response to the here and now rather than a plan which is future-proof which is completely needed yet neglected. The present Eurozone situation is not too dissimilar to that of an ailing relationship. You’ve been together for while, you’ve had great time but now its come to a point of stagnation where its breeding disagreement and resentment. You should end it now but instead you convince yourself to carry on believing it will get better however it the relationship continues to disintegrate to the point where the relationship has reached breaking point. For the Eurozone, breaking point would be a greater financial crisis than of the late 2000s. It is imperative, Europe takes the radical action needed and avoid convincing themselves things will get better.