Mirtchev, A. (2012, February 24). The Eurozone’s Unattractive Options. Europe’s World.
The latest iteration of Europe’s sovereign debt crisis is now into its third year. The imbalances laid bare by it now pose a threat that the constant pressure on eurozone sovereign balance sheets could become the new norm for the eurozone. It is far from clear whether the efforts of Germany and France to institute a deeper and sturdier fiscal and monetary union can achieve that goal, even in the short term. The missing element is a growth strategy, which is the real threat to global economic security.
From its inception, the eurozone club encompassed a palette of variegated and often divergent developing economies. When the euro was launched alongside national currencies, eleven EU member states met the criteria. These eleven included today’s most struggling economies – Italy, Portugal, Spain and Ireland. Greece was the next to join in 2001. Instead of a currency union made up of economies that were more or less on an equal footing, the prospects for and the capacity to sustain economic growth between the different eurozone members were highly disparate. This fact could be glossed over as long as the global economy continued to expand, German exporters continued to be profitable, and the poorer eurozone members continued to receive substantial structural fund transfers and easy financing.