News / Europe

EU Divided on New Deal to Save Eurozone

Slovenia's Prime Minister Barut Pahor (L), Germany's Chancellor Angela Merkel (C) and Finland's Prime Minister Jyrki Katainen attend a European Union summit in Brussels December 9, 2011.
Slovenia's Prime Minister Barut Pahor (L), Germany's Chancellor Angela Merkel (C) and Finland's Prime Minister Jyrki Katainen attend a European Union summit in Brussels December 9, 2011.
Lisa Bryant

Stock markets and the value the euro currency rose after most members of the European Union agreed to a new deal Friday, increasing their economic ties to save the struggling eurozone. But reaction is mixed about the agreement, cobbled together after marathon talks among European leaders in Brussels.

European Central Bank chief Mario Draghi reacted positively to the agreement for stronger fiscal ties and better control over government budgets.

"It's a very good outcome for the euro area, very good. It's quite close to a good fiscal compact, and certainly it's going to be the basis for a much more disciplined economic policy for euro-area members, and certainly it's going to be helpful in the present situation," Draghi said.

Graphic map of countries that use the Euro

Twenty-three of the EU's 27 members have agreed to the pact, championed by economic heavyweights France and Germany to make sure Europe's sovereign debt and banking crisis doesn't happen again.  That includes all 17 members of the embattled eurozone. But at a final press conference on Friday, European Union president Herman von Rumpoy said three more countries are considering joining - which would leave Britain as the single holdout.

"Our preference went to a full-fledged treaty change with the 27, changing the treaties of the Eurpean Union. We tried it, but because there was not a unanimous decision, we have to take another decision," he said.

German Chancellor Angela Merkel hailed the deal as a success.  She said those who opted to create a new fiscal union chose a future of more solidarity and economic coherence which will make the euro currency more secure.

EU members adhering to the new treaty must commit to keeping their deficits below 0.5 percent of their economic output - or risk sanctions.  The pact is expected to be signed by March. European leaders also agreed on other measures to stop the eurozone crisis from spreading - like giving the International Monetary Fund another $260 billion to bolster financial firewalls.

But Simon Tilford, chief economist of the London-based Center for European Reform, says the new treaty does nothing to resolve to resolve Europe's debt crisis.

"The problem is that fiscal austerity will not solve this crisis - at least not alone," Tilford said. "Fiscal austerity has in many ways been part of the crisis. Enforcing unending austerity on the countries in the periphery has already made their predicaments much worse and threatens to make a bad situation in Spain and Italy already worse than it currently is."

Other analysts fear the deal weakens European unity - with one group of countries part of the new pact and another out of it.  British Prime Minister David Cameron defended his decision to reject the treaty - and offered another vision of Europe.

"We're not in the euro, and I'm glad we're not in the euro," Cameron said. "So i think the idea of Europe being more of a network - you choose those organizations you join, you choose those organizations you don't join - is actually a way in which Britain can get what we want and what we need in Europe."

Analyst Tilford says whether Britain and others will be weaker for opting out of the fiscal pact depends on what happens to the eurozone.

"If the eurozone does master this crisis and holds together, we're likely to see increased integration within participating countries within the eurozone, and Britain will become progressively marginalized within the EU," Tilford said.

But if the eurozone crisis drags on and the euro area fractures, he says, that's another story. And Tilford sees nothing in the new pact EU leaders agreed on that makes him optimistic about the euro's future.

You May Like

Turbulent Transition Imperils Tunisia’s Arab Spring Gains

Critics say new anti-terrorism laws worsen Tunisia's situation while others put faith in country’s vibrant civil organizations, women’s movement More

Burundi’s Political Crisis May Become Humanitarian One

United Nations aid agencies issue warning as deadly violence sends tens of thousands fleeing More

Yemenis Adjust to Life Under Houthi Rule

Locals want warring parties to strike deal to stop bloodletting before deciding how country is governed More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Seoul Sponsors Korean Unification Fairi
X
Brian Padden
May 29, 2015 1:27 PM
With inter-Korean relations deteriorating over the North’s nuclear program, past military provocations and human rights abuses, many Koreans still hold out hope for eventual peaceful re-unification. VOA’s Brian Padden visited a “unification fair” held this week in Seoul, where border communities promoted the benefits of increased cooperation.
Video

Video Seoul Sponsors Korean Unification Fair

With inter-Korean relations deteriorating over the North’s nuclear program, past military provocations and human rights abuses, many Koreans still hold out hope for eventual peaceful re-unification. VOA’s Brian Padden visited a “unification fair” held this week in Seoul, where border communities promoted the benefits of increased cooperation.
Video

Video Purple Door Coffeeshop: Changing Lives One Cup at a Time

For a quarter of his life, Kevin Persons lived on the street. Today, he is working behind the counter of an espresso bar, serving coffee and working to transition off the streets and into a home. Paul Vargas reports for VOA.
Video

Video Modular Robot Getting Closer to Reality

A robot being developed at Carnegie Mellon University has evolved into a multi-legged modular mechanical snake, able to move over rugged surfaces and explore the surroundings. Scientists say such machines could someday help in search and rescue operations. VOA’s George Putic reports.
Video

Video Shanghai Hosts Big Consumer Electronics Show

Electronic gadgets are a huge success in China, judging by the first Asian Consumer Electronics Show, held this week in Shanghai. Over the course of two days, more than 20,000 visitors watched, tested and played with useful and some less-useful electronic devices exhibited by about 200 manufacturers. VOA’s George Putic has more.
Video

Video Forced to Return Home, Afghan Refugees Face Increased Hardship

Undocumented refugees returning to Afghanistan from Pakistan have no jobs, no support system, and no home return to, and international aid agencies say they and the government are overwhelmed and under-resourced. Ayesha Tanzeem has more from Kabul.
Video

Video Britain Makes Controversial Move to Crack Down on Extremism

Britain is moving to tighten controls on extremist rhetoric, even when it does not incite violence or hatred -- a move that some are concerned might unduly restrict basic freedoms. It is an issue many countries are grappling with as extremist groups gain power in the Middle East, fueled in part by donations and fighters from the West. VOA’s Al Pessin reports from London.
Video

Video 3D Printer Makes Replica of Iconic Sports Car

Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video Al-Shabab Recruitment Drive Still on In Kenya

The al-Shabab militants that have long battled for control of Somalia also have recruited thousands of young people in Kenya, leaving many families disconsolate. Mohammed Yusuf recently visited the Kenyan town of Isiolo, and met with relatives of those recruited, as well as a many who have helped with the recruiting.
Video

Video A Small Oasis on Kabul's Outskirts Provides Relief From Security Tensions

When people in Kabul want to get away from the city and relax, many choose Qargha Lake, a small resort on the outskirts of Kabul. Ayesha Tanzeem visited and talked with people about the precious oasis.
Video

Video Kenyans Lament Losing Sons to al-Shabab

There is agony, fear and lost hope in the Kenyan town of Isiolo, a key target of a new al-Shabab recruitment drive. VOA's Mohammed Yusuf visits Isiolo to speak with families and at least one man who says he was a recruiter.
Video

Video Scientists Say Plankton More Important Than Previously Thought

Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video Kenya’s Capital Sees Rise in Shisha Parlors

In Kenya, the smoking of shisha, a type of flavored tobacco, is the latest craze. Patrons are flocking to shisha parlors to smoke and socialize. But the practice can be addictive and harmful, though many dabblers may not realize the dangers, according to a new review. Lenny Ruvaga has more on the story for VOA from Nairobi, Kenya.

VOA Blogs