During the last eight years the European financial crisis that started in 2008 has presumably proved to be the biggest challenge the European community faced for decades. Economic turmoil that hit the most such countries as Greece, Spain, Portugal, Ireland, Cyprus was even more accentuated by the fact that most European countries have common currency – euro. Therefore, in the light of this last circumstance, debt crisis would have been not so strong if it touched only one or two countries. However, shared currency and, therefore, closely intertwined financial systems add up to the domino effect happening in the European Union which is threatening to collapse the entire system altogether. Greece is a very good example – Greece had euro and now the entire Europe is paying much money in order not to follow the collapsing path of this country.
The specific way in which the financial crisis can influence – and is influencing – the stability of Europe as a solid entity is the fact that economic problems spill over in political problems. A very good example in this respect is Greece and Germany’s attempts to bail it out (which formally are Europe’s attempts, but Germany outweighs other players by far). Greece is in many ways the record holder when it comes to financial crisis. The youth unemployment rate is more than 50 percent. Its economy has been shrinking for five years, approximately 6 percent each year (by the way, for a state this almost means approaching the status of a failed state in a decade. Imagine how swiftly the EU can fail with a good number of such countries). The current debt Greece has constitutes 160 percent of its GDP, but it also has unfunded liabilities that translate into more than 800 percent of GDP (Snyder, 2012). Just imagine that hypothetically Greece would be the only problematic country in the EU. Even that it would be hard for the EU to bail Greece out. But there are two more grave circumstances – there are at least five such countries, and their governments are not always cooperating. At the time when cooperation and economy are badly needed populist forces win the elections in Greece and Alexis Zipras as the prime-minister together with Yanis Varoufakis as the minister of finance start impeding negotiations with the EU. They do not comply with requirements of Brussels which are not Brussels’s wish but an essential need to save Greece. Still, Greece authorities deny a deal which is utmostly irrational. And even when reelection happens, the Greek elect the same populists! This proves that economic divergences in Europe are only a starting point. The real problem is when it comes to political disagreements. And that is namely the thing that has a great chance to bury the European Union
Another very good example is Cyprus. This is a small country but the fact that it is a financial haven means a lot. This is the most significant offshore for the European companies which means that undermining namely this country means undermining finances on which economies of literally al European states are based. Given that since 2009 Cypriot economy has been in recession it is no wonder that the entire European economy is at a stalemate. And though Cypriot authorities are more willing to cooperate political tensions are still sufficient (Wilson, 2012). Cypriots protest in the streets against cuts because they do not have anything to live on, Germans protest in the streets against lending too much money from their own taxes abroad, instead putting it into the very German economy, the Greek protest in the streets against measures they are just not willing even to try to comply with.
All of the above proves that disagreements in the European Union are immense. And it would be not so fatal if these were just disagreements. In fact, what the crisis shows us is that problems are systematic: economies are way to different, both by volume and by structure; political cultures are significantly divergent; members of the European Union are all too different in their economic realities and potential. When politics comes into play it becomes obvious that soon enough this idea will be very popular – if building a common Europe is so common, so out of pragmatic considerations it is much easier and much more beneficial to work on economic prosperity all alone.
Bibliography
Snyder, Michael. “27 Statistics about the European Economic Crisis that are almost too Crazy to Believe.” The Economic Collapse.” 12 Apr. 2012. http://theeconomiccollapseblog.com/archives/27-statistics-about-the-european-economic-crisis-that-are-almost-too-crazy-to-believe.
“Selected Principal European Indicators.” Eurostat. N.d. http://ec.europa.eu/eurostat/web/euro-indicators/peeis.
Wilson, James. “Cyprus Requests Eurozone Bailout.” The Financial Times. 25 June 2012. http://www.ft.com/cms/s/80320e0e-bed0-11e1-b24b-00144feabdc0,Authorised=false.html?siteedition=uk&_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F80320e0e-bed0-11e1-b24b-00144feabdc0.html%3Fsiteedition%3Duk&_i_referer=https%3A%2F%2Fen.wikipedia.org%2F6666cd76f96956469e7be39d750cc7d9&classification=conditional_standard&iab=barrier-app.
