Business environment in Europe
The idea of a unified Europe has been in existed and constantly resurfaced since history. The economic and political stability within the region has been supported by the idea of a unified Europe. The main objective for the European Union has been to ensure peace among all the nations. The rules governing the business environment in Europe ensure that there a freedom of movement for capital, people, goods and services. However, these rules are not sufficient to create a free market business environment. Fee market can be achieved with a restructuring of policies governing the environment for doing business.
So far, the creation of a free market has really been a major step in creation of an integrated European economy. The idea of having a common monetary system or currency was intended to make the change the level of economic integration. This is primarily the reason why there are conditions stipulated for members of the European Union who want to join the Eurozone. All policies regarding finances and currencies are administered by the European central bank ECB. The current criteria for coverage are based upon macroeconomic indicators that measure specific attributes. The indicators measure the stability of prices within an individual country so that the rate of inflation of a single country is confined to specific limits. This ensures that inflation rate of a member country does not affect the inflation of the entire Eurozone. The indicators also measure the sustainability and soundness of public funds of a country. It achieves this through limiting a member countries from excessive government borrowing that would lead to high deficits.
The proposed structure by the both France and Germany attempts to modify the EU treaty so that stricter discipliner measures are imposed on members who fail to comply with the fiscal rules. However, with this proposal, an issue remains in suspense. Getting countries within the EU to sign up for remains an issue. The Eurozone can continue with the current 17 members or it can choose to sign up all the 27 members of the European Union. The former is obviously a better choice since it allows members to meet specific threshold before being obliged to join the Eurozone. The rules about fiscal discipline would create high limits for members and other countries who intend to join the Eurozone.
A link to the video on the future of the Eurozone (http://www.youtube.com/watch?v=SHLfeI5MoeU)
Changing the Euro-zone structure
The current structure of the Eurozone has led to debates about the need to make changes about operations and memberships. This issue rose because of the debt crisis experienced by the Eurozone. The Eurozone simply refers to the countries who have officially adopted the euro as they common currency. It constitutes of 17 countries. These are mainly the rich nations in Europe. The current structures require that the other members of the European Union are mandated to join the Eurozone countries but they have to meet a certain criteria. Once they reach the threshold, they automatically join.
France and Germany therefore came up with proposals of how the Eurozone should be structured in order to avoid the crisis it has experienced because of three member countries: Greece, Northern Ireland and Italy. Several member countries have shown disunity in terms of their position on how to deal with the Greece issue. Some countries stand on for the opinion that since the problem is a European issue, it should be solved by member states unanimously. However, France and Germany have differed with this opinion by ruling out the idea of a Eurozone bond. The problem with stand is that sometimes in the future stability for the Eurozone will primarily depend on the some form of debt issuance. If the Eurozone intends to have long-term stability then debt issuance has to be an agenda for consideration.
The fiscal policies are currently stipulated in the broad economic guidelines, which are provided to every member state of the European Union. Even though these fiscal policies are provided to every member state of EU, there is a particular reference of the guidelines made to the members of the Eurozone. The policies are not binding to any member, but only represent coordination in terms of policy. The guidelines consider structures that link the 27 economies together. In order for the euro to maintain its stability as a global currency, each of the members is expected to honour the stability and growth pact. In this pact, there is a limit for national debt and deficit that each member is required to maintain. The limit stands at 3 per cent. Even though there have been disciplinary measures already in place to deal with members who deviate from the provisions of the pact, Germany and France have been proposing stricter disciplinary measure as a means to avoid repetition of the case of Greece.
The recent debates between members of the European Union have also focused on the issue of constitutionalizing a balanced national budget for each of the member states. The reason for balancing the individual state’s national budget is to enable the European court of justice to determine whether each member is adhering to the requirements of a new treaty. Britain, which is currently not a member of the Eurozone, has expressed its position concerning using already established institutions that belong to the European Union. The Eurozone pact belongs to an already established union called the European Union. If in case they intend to work independently from the other members of the European Union, then they should not utilize institutions of the European Union. This clearly has been the position of Britain concerning some of the issues proposed for the new treaty.
Britain does not want to see the euro becomes stronger. The French government on its part thinks that the euro currency is the most influential lever. The French government also is against the idea of signing up every member of the European Union into the Eurozone as proposed by countries such as Britain. The crisis currently experienced by members of the Eurozone is a seen as a way in which the rich nations in Europe can use to block other nations from gaining membership unless they make threshold criteria.
Therefore, different countries have differing perceptions on the appropriate way of saving the euro from the current crisis. One side of the debate wants the every member of the European Union to be signed up to officially use the euro. The other side of the debate wants to be in total control of the Eurozone by blocking other members who do not meet the requirements for a sustainable growth of the initiative. France and its co-sponsors want power in Europe to be concentrated within the Euro-zone. Germany also expressed its concerns and position. The intention of Germany is to ensure economic within the European Union are decided collectively among every member of the EU. A country like Britain enjoys a lot of global leverage and when the euro or the entire union of European nation becomes stronger; her global influence will be diminished. Britain has even in the recent past differed and refused to be party to procedural matters during an EU meeting.
With the crisis into play, differing opinions have emerged over who exactly should pay for the debt crisis of some of the member states, for instance Greece. France and Germany who are currently enjoying support for each other propose that the best way to provide support for bonds of member states is with European stability mechanism. In case anything happens, the country with the bond and the European stability mechanism (ESM) would be solely responsible without involving other member states. The recent veto by Britain in an important procedural matter could mean draw back if the voting for governance of ESM was unanimous. In order to avoid such an instance, the new treaty is expected to change governance to 85 per cent majority from the old system of 100 per cent majority.
Reference list
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