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Government Economy

The Triumph of Politics in Europe

A European flag and a Greek flag
Will Europe's politicians save the Euro? Photo: YoungJ523/flickr

MADRID – Economics, particularly economic theories, always yield in the end to political imperatives. That is why Europe’s fast-changing political landscape, reshaped by electoral insurrections in France and Greece against German-backed fiscal austerity, is bound to affect Europe’s economic policies as well.

Such an imperative has been at work throughout Europe’s postwar history. Indeed, Europe’s shift from the modest customs union of the European Economic Community to the single market and common currency of today’s European Monetary Union was itself a fundamentally political move, one with strategic implications, of course. France wanted to tame German power by harnessing it to the European project, and Germany was prepared to sacrifice the Deutsche Mark for the sake of France’s acceptance of a united Germany, the nightmare of Europe’s recent past.

An economically robust Germany is, without doubt, vital to the European project, if only because history has shown how dangerous an unhappy Germany can be. Indeed, it was thanks to the euro – and the captive European market that goes with it – that Germany today is the world’s second-leading exporter (China surpassed it in 2009).

Categories
Government

Views From Greece: Europe’s Paradigm Shift

Photo: opendemocracy/flickr

In a recent article, former Spanish foreign minister Ana Palacio pointed out that Europe, in deciding to move toward a common currency back in the late 1980s, made its “greatest miscalculation [in that it accepted] the assumption of stability while on the verge of a systemic transformation impregnated with volatility.”

Palacio’s words may sound obvious today with the help of hindsight, especially since the European Union is reeling from the impact of the sovereign debt crisis and the persistent confusion over what to do to correct the mess. And correctly Palacio suggests that what Europe needs is a new political paradigm that will allow it to rise to the requirements of a fast changing world order.

This is the greatest challenge that the nominally “united” Europe has come across since its inception. In the recent past, European leaders appeared to assume that enlargement by itself would somehow automatically trigger processes for the “deepening” of European political integration. But, just like in the case of adopting the euro, Europeans again made the incorrect assumptions of a universe operating according to wishful thinking and not according to the laws of Nature.

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Economy

Keyword in Focus: Greece

The Greek Parliament. Photo: SimonC flickr.

After yesterday’s vote and the approval today of legislation allowing for the rapid implementation of new austerity measures, one may legitimately wonder what tomorrow has in store for Greece, a country that will always have special significance in the West.

Few, it seems, have failed to notice the symmetry in the fact that until Wednesday the fate of the latest common European project very much seemed to turn—and perhaps still turns—on events in the birthplace of the oldest one.

Though more treacherous waters lie ahead, for now at least Europe has avoided the ‘Lehman moment’ that it was feared could trigger the unraveling of its monetary union and an even deeper crisis for its political one. No Marathon or Salamis, to be sure — but welcome news nonetheless.

We take this opportunity to showcase the holdings of the ISN Digital Library on Greece

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Government Finance Keyword in Focus

Keyword in Focus: Euro

Europe on a shoestring, photo: Howard Lake/flickr

With Spain next on the list of eurozone countries on the brink of financial abyss, nerves about the future of the great European experiment are at an all-time high. The narrative of the euro’s crisis seems self-fulfilling as  markets move from one financially challenged euro country to the next, and after the Irish bailout, Portugal and Spain seem to be next in line, with cups in their hands and market speculators on their backs.

The collapse of the Spanish economy, with its overstretched banks, chronically high unemployment and a much larger economy than previous recipients of EU/IMF bailout money, is a particularly worrying prospect, yet European leaders seem committed to saving the euro. Even Britain’s George Osborne, the deeply euro-skeptic Chancellor of the Exchequer, acknowledged last week that despite not joining the euro (and still thinking it was a bad idea- “Hah, I told you so!”), it is in Britain’s interest to help with the bailout efforts and to ensure that neighboring countries like Ireland are repaired and revitalized.

With the air of crisis set to loom over Europe for months to come, EU leaders and Europhiles everywhere must be asking themselves: How do we get out of this mess (and how did we get into it in the first place)? Because as much as Americans or even the Brits might enjoy gloating in the face of this largely self-inflicted mess, the EU and its experiment with a common currency are here to stay.

For an excellent set of resources on this highly topical issue, check out our Euro keyword.

Categories
International Relations Security

Cyprus: A Mediterranean Symptom

UN Buffer Zone - Ledra, Cyprus / Photo: Jpatokal, Wikipedia

The division of Cyprus embodies most of the challenges that the Mediterranean region is facing today.

In 1974, following the Greek coup attempt, the Turks invaded the island and now occupy the northern part – called the Turkish Republic of Northern Cyprus – which is recognized only by Turkey.

Since that time, the frozen conflict over Cyprus has been a sticking point for both the EU and Turkey: the EU for having one of its member states occupied by a foreign country; and Turkey for having its EU accession hopes slowed down.

Cyprus represents a divided region, divided between a Muslim and a Christian community; between an aging side looking for comfort and a youthful one looking for opportunities; between a peaceful Europe with a high GDP and a conflicting Arab world that struggles to adapt to globalization.

It is also divided by a physical wall, the Green Line, which until 2003, was not possible to cross.