In a brief but poignant article, the future of the Euro is discussed. The economic collapses of Greece, Spain, and Ireland have led many to say that the Euro is in danger of being dissolved. The stronger economic European countries like Germany and France have had to pool their money together to prop up these struggling countries. But is this a sustainable way to operate? French President Nicolas Sarkozy, at the recent Davos World Economic Forum, has said the stability and lasting influence of the Euro is a main priority.
The article highlights Sarkozy's commitment to aiding European countries that have found themselves in near economic ruin. He says the danger of not doing so would lead to the collapse of the Euro, the consequences of which would be devastating.
Should countries like Ireland be able to operate by pinning their success on unstable sources of revenue and unsustainable tax systems because they know they will be bailed out by the EU? While stability in the region may be achieved by the recent 'prop-up' of Ireland, Greece, and Spain, it may come at a price. It may create the precedent that going bankrupt is not as disastrous as previously thought. That's why it's of the utmost importance that 'good individual behavior and surveillance' need to be improved, as the article points out. Sarkozy says that countries need to focus on their individual debts and the imbalance this creates for the EU. If these issues aren't addressed, we may see further imbalance and more bailouts to come.
1 comment:
I would agree with Sarkozy on this debate. To start, it is important to distinguish between the EU as an organization and using the Euro. It is possible to be in the EU and not use the Euro, as Sweden and Great Britain are doing now. That said, I think it is important The Euro stay in existence because of its widespread use and importance as a major world currency. It also makes transactions between major European economic players easier. Ireland is geographically small but was economically powerful until 2008, thus the importance of propping them up. The collapse or demise of the Euro would be disastrous for the world, let alone Europe. Countries in Europe are usually bailed out because of their membership to the EU or their importance in trade. Currency is not the issue, as was evident when Russia lifted Iceland from the depths of bankruptcy
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