As part of the loan agreements, countries receiving bailout funds were required to meet austerity measures designed to slow down the growth of public-sector debt. Seventeen eurozone countries voted to create the EFSF inspecifically to address and assist the European sovereign debt crisis. The European Sovereign Debt Crisis peaked in to
At the height of the panic in early May that gripped governments in continental Europe and investors across the world, there were many ominous signs that the situation was quite similar to that which preceded the collapse of Lehman Brothers and that precipitated the world economy into the deepest recession it has gone through since the end of the Second World War, as even such an authoritative figure as the president of the European Central Bank ECBJean-Claude Trichet, has recognised.
The risk of a wave of sovereign states in Europe defaulting on their debts forced even US president Barack Obama to step in and apply pressure on the French and German governments to agree to a solution that would avert another financial meltdown. In effect, European leaders spent three months—from mid-February to mid-May—wrangling over the exact terms on which they would provide financial assistance to the Greek state.
Speculation about whether financial assistance would be provided at all and about whether the Economic and Monetary Union EMU, the arrangement underpinning the euro would survive the crisis was rife. In the meantime, the austerity policies that accompanied throughout Europe the process culminating in the introduction European sovereign debt crisis the euro in are being implemented all over again, causing pain and resistance.
European integration in historical perspective The process of European integration was triggered by geopolitical considerations. France would take the lead politically and Germany would provide much of the economic muscle. The strategic aims of the French partly coincided with those of the Americans.
The first was the fear of a Russian takeover of Western Europe. The Western European economies,the German in particular, had to be reconstructed and rearmed under US leadership this found concrete expression in Nato so as to constitute a bulwark against the Stalinist bloc.
But for reconstruction to prove effective, the Franco-German rivalries which had led to three wars in a period of 70 years had to be contained. The Marshall Plan for US aid to Europe, announced in Junewas conditioned on the acceptance by the Europeans of some form of cooperation.
Rebuilding Europe and bringing back some degree of economic stability would ease the pressure the labour movement was exerting. This would progressively come into force through the elimination of tariffs by The course of developments changed to some extent in with the demise of the French Fourth Republic and the advent of the Fifth under General Charles de Gaulle.
This represented a turn to a more assertive French foreign policy based on a more centralised political system. For six months France withdrew from the council of ministers of EEC member states.
It thus blocked a major move towards greater centralisation in the governance of the EEC.
It persists today and can explain many of the contradictions that run through the European Union. The s saw two very important changes. The first was the demise of the Bretton Woods system of fixed exchange rates and the second was the return of capitalist crisis, starting with the recession of Both had the potential to undo much of what had been achieved during the previous two decades.
The end of fixed exchange rates led to disruptive competitive devaluations of national currencies of EEC member states and dangerous volatility in foreign exchange markets.
The risk that European economies would drift apart was amplified. It could also create huge problems for all those firms that were now operating across the borders of the member states and needed stability in exchange rates to plan their operations.
Similarly, the recession of led to a host of national uncoordinated responses. Progressively, the member states of the EEC managed to forge a common strategy. This time the arrangements were more favourable to weak currencies. This debate about the contours of European monetary cooperation and the balance it should achieve between the interests of weak and strong currencies is a constant feature of European integration since the s.
Much of the wrangling in spring had to do precisely with this. The depreciation of the dollar was a major feature of the s, and indeed, ever since it has been a major weapon for the US ruling class in its attempt to preserve its economic power.
So the US ruling class attempted to reverse the uneven development of the previous decades through various policies and moves. These included cutting back on the level of arms expenditure, 10 protectionist measures such as a 10 percent rise in tariffs 11 and an onslaught on the living standards of US workers.
The result this has had on the German and, by extension, the European economy has been to introduce a deflationary bias in the way it has been run ever since.
Since German development largely depended on an export-driven strategy and since the deutschmark could not compete with the dollar as an international reserve currency—thus preventing the US from exploiting the dollar in the way it has been doing—the only strategy available to Germany has been to suppress domestic demand, speed up the rationalisation and technological upgrading of its productive apparatus, shift production abroad to locations with lower labour costs and persistently run current account surpluses.
In effect, for monetary cooperation to be successful there had to be some degree of economic policy convergence, and given the new conditions of international economic competition imposed by the US, this could only happen when the rest of Europe aligned itself on German economic policy.
The act aimed to complete the internal market by removing all trade barriers by A timeline of the debt crisis of the eurozone, from the creation of the currency in to the current Greek woes. The European debt crisis (often also referred to as the Eurozone crisis or the European sovereign debt crisis) is a multi-year debt crisis that has been taking place in the European Union since the end of Several eurozone member states (Greece, Portugal, Ireland, Spain and Cyprus) were unable to repay or refinance their government debt or to bail out over-indebted banks under their.
The European debt crisis refers to the struggle faced by eurozone countries in paying off debts they had accumulated in recent decades. Debt Crisis Live.
Live coverage of the international debt crisis and rollercoaster financial markets in the eurozone and US. Earlier PIIE research examined whether rising interest rates might unleash a debt crisis in Italy. The answer was “no,” under two conditions: First, that rising interest rates reflected economic recovery; and second, that the Italian government would be prepared to cooperate with European.
The European debt crisis (often also referred to as the Eurozone crisis or the European sovereign debt crisis) is a multi-year debt crisis that has been taking place in the European Union since the end of