[Article rédigé en Anglais] European Union was set up after World War II in a way to make European countries closer and build a new era of prosperity, peace and development. In this way, European Union worked as no wars happened inside the EU and EU became the first economic power in the world (surpassing the US).
However, since last few years, EU face new challenges, especially the public debt crisis of EU countries, such as countries described as P.I.G.S (Portugal, Italy, Greece and Spain). For example, time is very bad for Greece, who is going bankruptcy because of internal problem and high interest rate (up to 30% a year!).
To solve the problem, Greece have two solutions:
– Staying in the Eurozone. Because the euro currency is overvalued and Greece has a low competitivity (Greece is not Germany), Greece can survive only if the other countries help him while lending money with a low-interest rate.
However, Germany don’t want to pay for the mistake of others, in the sense of the tale The Cicada and the Ant.
– Leaving the Euro and coming back to the drachma, the Greek former currency, and devaluate the currency to restore its competitivity. It will decrease the price of exportations, but Greece doesn’t export a lot. And this solution will lead to an increase of the prince of importations and the price of public debt.
Furthermore, if countries like Greece or Spain leave the Eurozone, the euro will become stronger and stronger… what will cut the competititivity of remaining Euro countries. For a country like Germany which relies heavily on his export, an increase of the euro exchange-rate will be very harmful and not acceptable.
Business and political issues are embedded and the issue is very complicated. In my opinion, the future of the EU and the Euro will depend of the behavior of each country. Some economics says that a trade union is efficient when there is money transfert between the different zones. US government represent 20% of US GDP. EU budget is only 1% of EU GDP.
Countries has a lot of different strategies – Greece economy is a lot different than German economy which is different from French Economy – and different political issues. With so little money and conflict of interests between the countries, EU is condemn to collapse or to become an empty shell ntil better solidarity will come.
Take a group of friends who climb a mountain. If one person slip, it’s better for all to help him than cutting the rope. If people help each other, they will reach the peak sooner or later. If you save the life of your friend, perhaps he will save your life too later… Otherwise, it can’t just work.
In the real life, it’s the same. if Europe want to continue, EU has to gain power, get more money from Europeans, a true army and diplomacy and go over conflict of interest between countries while helping countries with difficulties with counterparts.