Europe must be grateful to Greece for dramatizing: how the Euro is fundamentally flawed; how the Euro’s failure could cause a financial-economic disaster; and how European Union (EU) leaders must, despite all their differences and electoral setbacks, cooperate to avoid a Greek tragedy.
By Federico Santi, editorial assistant at European Affairs
Reactions to the victory of François Hollande, the first socialist to hold the French presidency since 1985, have dominated the news for days as leaders and observers around the world assess the impact that his victory, along with the tumultuous election in Greece, will have on the way Europe will deal with the current economic crisis and the swirling debate on austerity versus stimulus for growth.
In response to the sovereign debt crisis in Europe the Fiscal Compact was signed in March by every EU member state except the Czech Republic and the United Kingdom. The fate of this Compact has been made uncertain by the elections in France and Greece, which are seen as a popular rejection of its terms and effects. Inspired by Germany and other proponents of fiscal discipline in Europe, the pact aims to prevent excessive deficits requiring bailouts like the ones needed by Greece, Portugal, Ireland, and Hungary. It requires national budgets to be in balance or in surplus, the EU’s new “golden rule.” The treaty will enter into effect on January 1, 2013, if by then twelve out of the 17 members of the Eurozone will have ratified it.
On April 20, The European Institute hosted Klaus Regling, Chief Executive of the European Financial Stability Facility (EFSF) for a discussion on the European debt crisis. Created barely two years ago, the European Financial Stability Facility (EFSF) has proven to be pivotal in the Eurozone’s efforts to safeguard financial stability and build a sustainable firewall to contain the effects of pressing sovereign debt among some member states. Mr. Regling assessed the progress made to date on Europe’s important reforms of economic and financial governance and the key challenges that still remain in achieving an effective resolution of the debt crisis. The discussion was moderated by Clay Lowery, Vice President of Rock Creek Global Advisors LLC.
In the most important Italian political development since the departure of Prime Minister Silvio Berlusconi, opposition leader Umberto Bossi, head of Italy’s Northern League party, was forced to resign from his position in a scandal involving illicit handling of party funds.
© COPYRIGHT THE EUROPEAN INSTITUTE 2009
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