Wither the Union?

Is the death knell sounding for the Euro and the Union? Der Spiegel asks the question.

“Critics warn that the euro zone is about to face a crucial test. Since the introduction of the common currency, they argue, the countries within the zone have grown further and further apart instead of growing together into a single economic zone, partly because there are no longer any currency fluctuations to offset competitive discrepancies.

“The community now consists of countries like Germany and Finland on the one side, with large current account surpluses, and countries like Greece and Portugal on the other, with massive deficits. The latter, unable to keep up with the continent’s powerhouse economies, lived on credit for years, partly as a result of low interest rates.”

The Washington Post considers the larger question of European unity, or lack thereof.

“In recent weeks, bitter disputes have broken out in Brussels over the naming of high-level diplomats overseas, while E.U. nations have been unable to reach a key agreement on how — and whether — to save Greece and prop up the hard-hit euro.

“The frictions in Europe could further pressure global currency and bond markets, hamper expansion of the euro and derail attempts to boost the region’s clout on the world stage.”

During America’s recent economic crisis the term “too big to fail” became something of a meme. The Euro, and the European Union, is also too big to fail. No matter what big economies like Germany or France think or their leaders say, they need the Union as much as the smaller nations do, if not more. The free flow of trade and labor are vital, after all export leaders like Germany depend on other E.U. nations as a ready market for their goods.

What the recent turmoil has exposed is the weak structure, especially fiscal structure, the Union is based on. The European Union has long been based on the myth that member states would keep their sovereignty and gain the benefits of union without any sacrifice. The reality is that nations within the Union have a responsibility to each other as well as their citizens and must behave that way.

Europeans, as well as their leaders, must ask the hard questions about what they want and what they are willing to sacrifice to get it. Smaller nations like Greece must join the 21st century (that means actually paying taxes and reigning in budget deficits) and nations like Germany must accept the fact that their status means that they have to help out when the going gets rough and not just threaten to ditch their responsibilities.

Much of what we are hearing and reading is posturing but beneath that we more serious issues that should not just continue to be ignored once the current crisis is dealt with. Nations within the union must start acting and dare we say believing that they are indeed in a union rather than a domestic partnership…

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