Proposals to face the Euro crisis

Thèmes abordés

Euro - crisis - Commission - proposal

Résumé du document

During a certain period, the funny abbreviation "PIIGS" was to be found everywhere in the news; this referred to Portugal, Italy, Ireland, Greece, Spain, the five European "sick men", endangering the survival of the Eurozone itself. While their situation still remains critical, the debt of the Eurozone reached 7000 billion euros. Since its creation, the common currency has had its share of massive support (2nd biggest world currency, leading role in financial markets, etc) as well as strong opposition: inflation, criticism regarding the loss of monetary sovereignty, need of abiding by drastic "convergence criteria", etc. A single and unified currency was supposed to act as a shield against any big financial disturbance.

But the financial crisis that started in 2008 proved the contrary. Indeed, the Eurozone officially entered recession during the third quarter of 2008. Especially in 2009-2010, it showed a huge dichotomy between monetary policies decided and implemented by a unified system of central banks, parallel to national economic measures taken by national authorities willing to keep their independence leading to growing economic gaps. But the Commission and other bodies have acted, and Treaties have been modified. Many measures have been taken since that date, even though a lot still needs to be done. It is commonly admitted now that the economic governance must improve.

Extraits

[...] It is wished that they be quicker and efficient, in case the convergence criteria are not taken into account. Any State having a debt superior to 60% of its GDP would have –after having in a short delay been warned- to quickly reduce it during the three following years. In case of non-compliance, special measures (“Excessive Deficit Procedure”) and fines would be decided. A new “reverse voting mechanism” is also envisaged: when imposing sanctions, a Commission proposal will be considered adopted unless the Council rejects it by a qualified majority These measures could be useful and certainly are necessary example, Ireland has been asked to reduce its deficit that has reached 32% of GDP. [...]

[...] And the debt of the Eurozone reaches 7000 billion Euros. Since its creation, the common currency has faced not only support (2nd world currency, leading role in financial markets ) but also strong opposition: inflation, critics about the loss of monetary sovereignty, need of abiding by drastic “convergence criteria”, etc. A single and unified currency was supposed to act as a shield, against any big financial disturbance. But the financial crisis that started in 2008 proved the contrary. Indeed, the Eurozone officially entered in recession during the third quarter of 2008. [...]

[...] Many fear that all these measures are implemented so as to take the role of national bodies. But already before that decision, all the measures taken by national governments because of pressing encouragements coming from the IMF, the ECB (for instance, austerity plans for Greece and Spain). One cannot forget the huge riots that took place in Greece on that purpose. Popular riots have also been huge in Spain, Portugal, France Generally speaking, the Growth and Stability Pact was aimed at limiting the divergence of national economies which have never been so significant! [...]

[...] Yet, common actions have not really been visible TRANSITION The European Union has tried to answer with a common voice to the economic crisis. National governments, the ECB and the Commission have worked together, making proposals and starting implementing measures. Some things have been done, but there are still many problems at stake, and also, some significant failures. II. SAVING THE EURO: SOME RESULTS, BUT MOST OF ALL, CHALLENGES One cannot state that nothing has changed since the beginning of the crisis. [...]

[...] Hence, new proposals were made. Indeed the title VIII of the TFEU “Provisions specific to Member States whose currency is the Euro” was modified because of the problematic context: article 136TFEU(“In order to ensure the proper functioning of economic and monetary union, [ the Council shall, [ adopt measures specific to those Member States whose currency is the euro: to strengthen the coordination and surveillance of their budgetary discipline; to set out economic policy guidelines for them, while ensuring that they are compatible with those adopted for the whole of the Union and are kept under surveillance.”), 137TFEU (about the functioning of meetings), and 138TFEU(gives a greater role to the European Council). [...]