News / Europe

Financial Crisis Roiled Euro Zone in 2010

Financial Crisis Roiled Euro Zone in 2010
Financial Crisis Roiled Euro Zone in 2010

Europe's single currency, the euro, was supposed to merge European countries into one robust monetary union. But the euro zone is as weak as its weakest link and that's a reality that can't be ignored as 2010 comes to a close. The financial crisis tested the bonds that hold Europe together and left a question mark over the future.

Recent protests in Ireland were typical of Europe in 2010.

Sovereign debt, spending cuts, and social unrest were a familiar sequence across the EU.


In 2010, Europe's single currency, the euro, was put to the test.

Greece was the first hotspot. The massive debt meant markets lost confidence in the country's ability to pay up.  

European leaders scrambled to strengthen the weak link, pouring more than $100 billion into the Greek economy. And creating a fund for future crises.   

Only six months later, when Ireland faced its own financial crisis, the money it needed was available.  

Iain Begg from the London School of Economics says it showed the euro can weather the storm. "This is characteristic of the way Europe operates.  It waits for something to go wrong and then in the process of finding a solution moves forward to a greater degree of integration, while still respecting the rights of individual member states," he said.

But even stronger economies, like France, face major debt. Cuts in public spending have sparked repeated strikes and massive protests.  

And leaders have struggled to balance the needs of their own countries with those of Europe.

Even Germany, long a key motor for European unity, hesitated before using taxpayer money to bail out other European economies.

National needs remain a top priority, says Begg. "It was never really going to be a United States of Europe and more a united Europe of states, and that's really what we're seeing now," he said.

After two World Wars tore the continent apart, visionaries imagined a Europe at peace, united politically and economically.

Simon Tilford is chief economist at the Center for European Reform. He says the financial crisis has left that vision in tatters.

"Unfortunately, the necessary solidarity has been eroded by the financial crisis. The electorates of countries that have been asked to guarantee loans to the other member states are strongly resentful of that because they think why should we do that. We're rewarding them for their profligacy, or what have you.  And that makes it much harder for governments to actually argue the case for the kind of integration necessary to put the whole thing on a more sustainable footing going forward," he said.

That might also be a major problem in the coming year.

Portugal, Italy and Spain could soon need bailouts of their own.  

And it could be difficult for European leaders to convince their electorates to dole out more cash.

Vanessa Rossi, from the research group Chatham House, says in 2011 Europe will have to decide on the strength of the bonds that hold it together. "The choice here in the system is for the member states to decide, are they going to have a club where they guarantee to back every member whatever  the cost and whatever the circumstances.  Or are they going to have a union where they say, no, we actually will accept that sometimes member states can have difficulties and that the investors in those member states will have to share part of the haircut, part of the pain, when the restructuring happens," he said.

Or EU countries could be allowed, she says, to default on their debt.

But that could mean the unraveling of the EU and the end of a dream built over many decades.

You May Like

China Investigates Former Powerful Security Chief

Former security chief and member of Politburo Standing Committee, Zhou Yongkang, under investigation for suspected 'serious disciplinary violation' More

India, US Look to Reset Ties During Kerry Visit

This week's talks will be first high level interaction between two countries since Prime Minister Narendra Modi took charge More

Video Young African Leadership Program Renamed to Honor Mandela

YALI program, launched by President Obama in 2010, aims to build skills in business, entrepreneurship, public management and civic leadership 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.
Vietnamese Staging Chinese Product Boycott After Oil Rig Spati
X
Reasey Poch
July 28, 2014 7:18 PM
China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video Vietnamese Staging Chinese Product Boycott After Oil Rig Spat

China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video ESA Spacecraft to Land on a Comet

After a long flight through deep space, a European Space Agency probe is finally approaching its target -- a comet millions of kilometers away from earth. Scientists say the mission may lead to some startling discoveries about the origins of the water on earth. VOA’s George Putic has more.
Video

Video Young Africans Arrive in US for Leadership Program

President Barack Obama's Young African Leadership Initiative has brought hundreds of young Africans to the United States for a six-week program aimed at building their knowledge and skills in fields such as public administration and business. Out of the 50,000 young Africans who applied for the program, just one percent was accepted. VOA's Laurel Bowman caught up with some of those who made the cut and has this report.
Video

Video In Honduras, Amnesty Rumors Fuel US Migration Surges

False rumors in Central America are fueling the current surge of undocumented young people being apprehended at the U.S. border. The inaccurate claims suggest the U.S. will give amnesty to young migrants from the region. As VOA's Brian Padden reports from Honduras, these rumors trace back to President Obama's 2012 executive order to halt deportations for some young undocumented immigrants already living in the United States.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.

AppleAndroid