News / Europe

Greece's Problems Spark Euro Zone Woes

Lisa Bryant

The European currency, the euro, is facing one of its biggest tests of its decade-old existence. The fiscal woes of euro zone member Greece are sparking fears in the financial markets that Athens will default on its debt - and concerns about other weak euro economies.

The euro fell sharply again on Friday, hitting its lowest level against the dollar since last May. Much of the concern in financial markets has been centered on Greece, which is struggling to curb a soaring deficit amounting to 12.7 percent of its Gross Domestic Product (GDP).

Earlier this week, the European Commission approved the Greek government's austerity plan. But EU Economic and Monetary Affairs Commissioner Joaquin Almunia warned Athens faced an uphill battle in implementing it."

"This deserves support but at the same time we need to strengthen our instruments [on] how the program is monitored, so as to avoid any slippages, to avoid that the objectives not be reached," said Joaquin Almunia.

Those words have not been enough to ease investor fears that Greece may default on its debt. They are also worried about other weak economies in the euro zone - notably Portugal and Spain, which also have ballooning deficits. Some analysts have even speculated that the euro zone risked breaking up - although most believe the 16-member monetary union will survive.

Philip Whyte is senior analyst for the Center for European Reform in London.

"I think that the current strains in the euro zone are certainly the most serious which have existed since it was set up and now we're going to find out whether a single currency is viable outside a political union," said Philip Whyte.

Whyte says Greece's plight will test whether other eurozone members in better economic shape - such as Germany and the Netherlands - are prepared to bail out Greece. Some analysts predict Greece could be pushed out of the bloc. Also unclear is whether the Greek government will have the political will to carry out the painful fiscal measures  it promised -- particularly if they spark protests.

Spain also faces potential social unrest over its austerity measures. And in Portugal, the parliament on Friday voted down the government's austerity plan.

Whyte says its unclear how the euro zone's problems will unfold in the coming weeks and months.

"But I think this problem can't be allowed to fester," he said. "The lesson of these sorts of crises is that the longer they're allowed to fester, the less confidence markets have that the problems will be resolved."

The Greek government has vowed to cut its deficit to 3 percent of GDP - the euro zone cap - by 2012.  

You May Like

At International AIDS Conference One Goal, Many Paths

The 12,000 delegates attending 20th International AIDS Conference in Melbourne have vastly different visions about how to eradicate disease More

Disasters May Doom Malaysia’s Flag Carrier

Even before loss of two jets loaded with passengers on international flights, company had been operating in red for three years, accumulating deficit of $1.3 billion More

Afghan Presidential Vote Audit Continues Despite Glitches

Process has been marred by walkouts by representatives of two competing candidates, Abdullah Abdullah and Ashraf Ghani 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.
Nature of Space Exploration Enters New Agei
X
Elizabeth Lee
July 20, 2014 2:36 AM
Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.
Video

Video Nature of Space Exploration Enters New Age

Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.
Video

Video Chicago’s Argonne Lab Developing Battery of the Future

In 2012, the U.S. Department of Energy’s Office of Science awarded a $120 million grant to a new technology center focused on battery development - headquartered at Argonne National Laboratory in suburban Chicago, Illinois. As VOA’s Kane Farabaugh reports, there scientists are making the next technological breakthroughs in energy storage.
Video

Video In NW Pakistan, Army Offensive Causes Massive Number of Displaced

Pakistan’s army offensive in North Waziristan has resulted in the large-scale displacement of the local population. VOA's Ayaz Gul reports from northwest Pakistan where authorities say around 80 percent of the estimated 1 million internally displaced persons [IDPs] have settled in Bannu district, while much of the remaining 20 percent are scattered in nearby cities.
Video

Video Kurdish Peshmerga Force Secures Kirkuk, Its Oil

The Kurdistan regional government has sent its Peshmerga troops into the adjacent province of Kirkuk to drive out insurgents, and to secure the area's rich oil fields. By doing this, the regional government has added a fourth province to the three it officially controls. The oil also provides revenue that could make an independent Kurdistan economically strong. VOA’s Jeffrey Young went out with the Peshmerga and filed this report.
Video

Video Malaysia Reeling: Second Air Disaster in Four Months

Malaysia is reeling from the second air disaster in four months involving the country’s flag carrier. Flight 340 vanished in March and despite an extensive search, no debris has been found. And on Thursday, Flight 17, likely hit by a surface-to-air missile, came apart over eastern Ukraine. The two incidents together have left more than 500 people dead. VOA Correspondent Steve Herman reports from Kuala Lumpur.
Video

Video Diplomatic Crisis Grows Over MH17 Plane Crash

The Malaysia Airlines crash in eastern Ukraine is drawing reaction from leaders around the world. With suspicions growing that a surface-to-air missile shot down the aircraft, there are increasing tensions in the international community over who is to blame. Henry Ridgwell reports for VOA from London.
Video

Video Undocumented Immigrants Face Perilous Journey to US, No Guarantees

Every day, hundreds of undocumented immigrants from Central America attempt the arduous journey through Mexico and turn themselves over to U.S. border patrol -- with the hope that they will not be turned away. But the dangers they face along the way are many, and as Ramon Taylor reports from the Rio Grande Valley in Texas, their fate rests on more than just the reception they get at the US border.
Video

Video Scientists Create Blackest Material Ever

Of all the black things in the universe only the infamous "black holes" are so black that not even a tiny amount of light can bounce back. But scientists have managed to create material almost as black, and it has enormous potential use. VOA’s George Putic has more.
Video

Video Fog Collector Transforming Maasai Water Harvesting in Kenya

The Maasai people of Kenya are known for their cattle-herding, nomadic lifestyle. But it's an existence that depends on access to adequate water for their herds and flocks. Lenny Ruvaga reports for VOA, on a "fog collector."

AppleAndroid