News / Europe

Euro Hits Crisis Stage

Multimedia

Storm clouds have been brewing over Europe and not even the biggest and most prudent economies are exempt from their threat.  Europe's decade-old currency, the euro, is in crisis with some eurozone members mired in massive debt and others having to provide bailout-loan guarantees to prevent default and shore up the common currency.

Europe's economic giant, Germany, has put up a large share of those guarantees.  Many Germans, however, are not happy about having to bail out what they consider Europe's big spenders, such as Greece.  Some are even questioning whether the euro can survive in the long-term.

Germany has introduced the country's most ambitious austerity plan since World War II, to bring its public debt within European Union limits and hopefully encourage others to follow suit, thereby stabilizing the euro.

Artur Fischer
Artur Fischer

The austerity plan has calmed markets down, says Artur Fischer, head of the Berlin Stock Exchange.

"The normal retail investor, he understands and realizes that serious measures have been taken," says Fischer.  "The professional investors, they understand that what happened right now is significant and going in the right direction."

The markets had been jittery for months about the stability of the euro.  The crisis was triggered by the Greek government's inability to pay back loans.  Fears spread about a possible default that could drag the entire eurozone with it.  Germany agreed to a bailout package of loan guarantees, but in return, Greece had to implement strict austerity measures. Those have not been popular on the streets.  The bailout was not popular in Germany either, where many felt they were being called on to help those who had simply spent beyond their means.

Fischer says that Germans need to understand why the bailout is important for the German economy.

"Let's just say we let Greece go into bankruptcy - well, their loan is in euros so going into bankruptcy the ones who are lending them the money they would have to take a cut [loss]," says Fischer.  "Who lent that money?  Well to some extent, quite a lot of German banks.  So, if Greece would have gone into default, as a consequence a number of banks in Europe, and in Germany especially, would have another big problem."

Since then Europe's big economic players and the International Monetary Fund have hammered out an additional loan guarantee plan worth around a trillion dollars to shore up other fragile European economies.

Michael Stuermer
Michael Stuermer

It has Michael Stuermer worried.  He is a historian and chief political correspondent for the influential German newspaper, Die Welt. He has doubts about the long-term viability of the euro and sees a break-up as quite possible.

"Some of the more solid partners in the euro system led by Germany would turn around and say, 'Look we've had enough of that'.  In order to save you, we first have to save ourselves.  We suspend our membership and we go back or we go forward to a kind of north European franc or guilder or something which sounds good and solid.  And, of course the southern part of the euro would fall apart," says Stuermer.

Many analysts have pointed to structural flaws in the euro, noting that countries in the eurozone may share the currency, but have little say over individual member budgets and spending.

Economic analyst Markus Kerber of Berlin's Technische University says the eurozone must be restructured.

"In the current form, the eurozone can not survive," says Kerber.  "We have to reshape it.  In the long run, in my opinion, unless there is a miracle, Greece cannot belong to the European Monetary Union because we cannot provide for the financial means to keep that country stable."

Kerber believes the German bailout plan is unconstitutional and violates the EU treaty, and he's bringing suit against the German government over it.

Not everyone sees such cracks within the euro and the European Union.  Fischer has no doubt, the euro will survive.

"What we experience now was predicted when the eurozone and the euro were put together because we all understood that we have economies with different kinds of speeds, different kind of abilities.  Now, today we're in a world where a few countries are very strong and others are weak.  So, we reach out and we try to help them.  There will be a point in time where that might the other way around," says Fischer.

So while the euro is under severe strain - and some see its demise - others believe the common currency along with Europe's political bonds have benefited too many to be discarded.

You May Like

Video One Year After Thai Coup, No End in Sight for Military Rule

Since carrying out the May 22, 2014 coup, the general has retired from the military but is still firmly in charge More

Goodbye, New York

This is what the fastest-growing big cities in America have in common More

Job-Seeking Bangladeshis Risk Lives to Find Work

The number of Bangladeshi migrants on smugglers’ boats bound for Southeast Asian countries has soared in the past two years 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.
Turkey's Main Opposition Party Hopes for Election Breakthroughi
X
May 22, 2015 10:23 AM
Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Turkey's Main Opposition Party Hopes for Election Breakthrough

Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Europe Follows US Lead in Tackling ‘Conflict Minerals’

Metals mined from conflict zones in places like the Democratic Republic of Congo are often sold by warlords to buy weapons. This week European lawmakers voted to force manufacturers to prove that their supply chains are not inadvertently fueling conflicts and human rights abuses. Henry Ridgwell reports from London.
Video

Video Class Tackles Questions of Race, Discrimination

Unrest in some U.S. cities is more than just a trending news item at Ladue Middle School in St. Louis, Missouri. As VOA’s Kane Farabaugh reports, it’s a focus of a multicultural studies class engaging students in wide-ranging discussions about racial tensions and police aggression.
Video

Video Mind-Controlled Prosthetics Are Getting Closer

Scientists and engineers are making substantial advances towards the ultimate goal in prosthetics – creation of limbs that can be controlled by the wearer’s mind. Thanks to sophisticated sensors capable of picking up the brain’s signals, an amputee in Iceland is literally bringing us one step closer to that goal. VOA’s George Putic reports.
Video

Video Afghan Economy Sinks As Foreign Troops Depart

As international troops prepare to leave Afghanistan, and many foreign aid groups follow, Afghans are grappling with how the exodus will affect the country's fragile economy. Ayesha Tanzeem reports from the Afghan capital, Kabul.
Video

Video Poverty, Ignorance Force Underage Girls Into Marriage

The recent marriage of a 17-year old Chechen girl to a local police chief who was 30 years older and already had a wife caused an outcry in Russia and beyond. The bride was reportedly forced to marry and her parents were intimidated into giving their consent. The union spotlighted yet again the plight of many underage girls in developing countries. Zlatica Hoke reports poverty, ignorance and fear are behind the practice, especially in Asia and Africa.
Video

Video South Korea Marks Gwangju Uprising Anniversary

South Korea this week marked the 35th anniversary of a protest that turned deadly. The Gwangju Uprising is credited with starting the country’s democratic revolution after it was violently quelled by South Korea’s former military rulers. But as Jason Strother reports, some observers worry that democracy has recently been eroded.
Video

Video California’s Water System Not Created To Handle Current Drought

The drought in California is moving into its fourth year. While the state's governor is mandating a reduction in urban water use, most of the water used in California is for agriculture. But both city dwellers and farmers are feeling the impact of the drought. Some experts say the state’s water system was not created to handle long periods of drought. Elizabeth Lee reports from Ventura County, an agricultural region just northwest of Los Angeles.
Video

Video How to Clone a Mammoth: The Science of De-Extinction

An international team of scientists has sequenced the complete genome of the woolly mammoth. Led by the Swedish Museum of Natural History in Stockholm, the work opens the door to recreate the huge herbivore, which last roamed the Earth 4,000 years ago. VOA’s Rosanne Skirble considers the science of de-extinction and its place on the planet
Video

Video Blind Boy Defines His Life with Music

Cole Moran was born blind. He also has cognitive delays and other birth defects. He has to learn everything by ear. Nevertheless, the 12-year-old has had an insatiable love for music since he was born. VOA’s June Soh introduces us to the young phenomenal harmonica player.

VOA Blogs