Sunday, May 16, 2010

Should the Eurozone Stay Together?

"The Greek debt crisis has raised serious doubts about the ability of Eurozone leaders to manage fiscal crises among weaker member countries. Following the European Union's nearly $1 trillion bailout plan announced May 10, questions remain about what kind of EU reforms could mitigate the financial risks associated with the union's disparate political and economic systems. CFR's Marc Levinson says while EU limits on member states' budgets have been largely ignored, a common fund for restructuring debts, similar to the International Monetary Fund's, might encourage member countries to rack up large debts. Heavily indebted countries like Spain and Portugal should push forward with severe budget cutbacks, despite the political battles and social unrest that may ensue, he adds. Ultimately, the Eurozone project should continue, he says, because for all its messiness, European integration has brought tremendous benefits to Europe."
Should the Eurozone Stay Together?

"This is a political question much more than an economic question. For all its messiness, European integration has brought tremendous benefits to Europe. Every EU country and every country that aspired to join the EU is a democracy; the dictators who used to run countries such as Greece, Spain, and Portugal are gone. No EU members have gone to war with one another. The EU has addressed issues from environmental protection to human rights to the free movement of workers in ways that individual member countries would not have been able to do. And on the economic side, the creation of the single market has been a boon to European businesses. There is no doubt that the euro is not an ideal currency arrangement, at least as it's structured now. But one shouldn't look at the currency in isolation from the many other efforts to bring Europe closer together." 

From "Reforming the Eurozone" - an interview conducted by Roya Wolverson, Staff Writer, with Marc Levinson, Senior Fellow for International Business, Council on Foreign Relations. 

To read the entire interview, please click here