To prevent a massive regional economic collapse, the European Union must either break apart or allow the EU’s leadership to have more jurisdiction over the Union’s economies. Pictured: the EU headquarters in Brussels, Belgium.
The European Union is experiencing some serious difficulties managing its finances. While some member countries like Germany have managed to keep their finances and their economies in decent shape, others like Greece have abused the financial support of their fellow members and have run their economies into near or total bankruptcy. Now, amid the election of anti-austerity leaders in the recent Greek and French elections, the European Union is faced with a precipice. Should Greece’s new leaders refuse to pay their debts to their fellow EU members, Greece may be removed from the Union entirely. What can be done?
To solve the debt crisis, the European Union has only two options. The first is to decentralize power, but this move would be extremely problematic as it would allow countries like Greece and Italy to continue to spend massively beyond their means. This would place even more pressure upon the better economies of the Union (namely Germany and France) to cough up the money needed to support their ailing neighbors. The interconnected nature of the European Union ensures that countries like Greece cannot be allowed to fail, as such an action would seriously damage the economies of the other states using the euro currency. Kicking out countries like Greece and Italy for failing to comply with austerity measures would be similarly damaging, as an entire sector of the interconnected European economy would completely disappear with the introduction of a new currency in Greece and/or Italy.
The second option is extremely unpalatable to many Europeans, but it seems to be the only option remaining to keep the benefits of the European Union from diminishing entirely and turning into drawbacks. Allowing the central leadership of the EU to retain more control over the fiscal matters of each EU country would allow economically productive countries such as Germany to force Greece and other delinquent nations to balance their budgets in exchange for debt payments from the rest of the EU’s members. However, as a consequence of this, the power of the individual nations of the EU would be severely limited, and this could cause some serious friction between members. Additionally, it is entirely possible that the push against fiscal austerity could be magnified on a regional scale, meaning that fiscally irresponsible leaders allow the EU to be driven into a ditch by out-of-control spending and massive debts.
The bottom line is that the European Union must begin to manage its fiscal problems the right way. Since the Union is so interconnected, it is an absolute necessity for the responsible members of the EU to enforce austerity measures on their fiscally wasteful companion states. Otherwise, the entirety of the Union will slip into a lasting and deeply damaging economic malaise.
