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Basis of Eurozone was fragile – European MP
Published: 18 May, 2010, 18:50
Edited: 20 May, 2010, 12:08
TAGS: EU, Crisis, Currencies, Economy
The Eurozone is facing its biggest challenge to date as the currency crumbles under the weight of Greece's fiscal crisis.
On Monday the Euro slumped to its lowest level against the dollar for four years.
It has sparked criticism about the body's handling of the bailout for Athens, with some warning that this could be the beginning of the end for the European Union.
Marta Andreasen, Member of the European Parliament and the UK Independence Party, thinks that “the basis on which the Eurozone has been set up was fragile and now we are starting to see the consequences of this.”
She also added that if the currency were to fail, there would be “a rethinking of the European Union as a whole.”
“The Eurozone involves countries that have very different economic situations – they had it at the beginning when they joined the Eurozone and these situations have been aggravated. And probably the Euro has been covering up for these differences but now it is pretty visible that we have different economic situations and we can’t really balance them,” Andreasen added.
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4 comments
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Maria, Yesterday the E.U. signed a F.T.A. with Central America and Mercosur (Brazil, Argentina). Turkey has had a Customs Union with the E.U. for a long time. Also there are trade agreements with ASEAN and from a great part of Africa. In fact the largest currency in Africa (CFA franc) is pegged to the Euro. Curiously, the CFA franc has been for decades the currency union of 14 states in Africa and a succees as demonstrated by the fact that Equatorial Guinea, which was an Spanish colony, did join the CFA and so Guinea Bissau, which was a Portuguese colony. CFA franc is now the single currency of 125 million people in Africa. The Eurozone needs a visa-free agreement with the Russian Federation, even if it is just one way (visa-free for E.U. countries) it would benefit Russian tourism more. Also it is essential the connections of the Russian superhighways and trains (high speed if possible) with the Transeuropean Network, the same way as North and South Stream. The European Union, with 500 million people and a per capita income of $30,000, is not just the largest economic hub in the World ($16 Tr. at market prices) but the largest population with a high level of life. JG, The U.K. will join the Eurozone during the next three years in my opinion. Every year there are more competences, and more important ones, for the European Central Bank. And the U.K. still doesn´t have a representative in the Executive Board of the E.C.B. The same way as about 60% of legislation now applied in the U.K. is really a transposition of European Directives financial regulation is also coming from the same source...and the U.K. is on the sidelines, just taking the E.U. regulation without taking part in its draft.
The Euro was not born of an economic need but of a political idea. It represents one of the elements of a federal "United States of Europe". From an economic standpoint, it makes no sense to bolt smaller and larger economies together, particularly when they are operating different fiscal policies. Worse still, several countries that were allowed to join Euroland had economies that plainly did not meet the criteria needed to join - but the politicians looked the other way because it suited their federalist ambitions. In a similar vein, it is unlikely that many of the last 12 countries to become EU members met the necessary criteria to join the EU but political expediency again won the day. Since Britain was forced out of the ERM in the early 90s, the pound found it's own level - which helped pull the country out of recession. The weaker economies in Euroland could usefully employ such flexibility to their advantage but as they are stuck with the Euro, this is not an option for them. With any luck, this Euro fiasco will be one of the things that helps us break free of a federal Europe and get back to a straightforward arrangement of mutual cooperation. Of course, if we were living in a democracy, we would have all had a vote on such monumental changes but this was a privilege only extended to the Irish (and even they had to keep voting until they voted "Yes").
"The U.K. will join the Eurozone during the next three years in my opinion." The new UK prime minister has decreed that the UK will not join the Euro in this parliament. Beyond that, favourable conditions for the UK to join are never likely to exist as the EU buys so little from Britain that the UK economy is substantially influenced by the US dollar. This was why Britain did not join under Tony Blair's leadership, despite his support for the idea.