Euro Crisis Essays

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The recent economic crisis in the European Union (EU) over the common currency, the euro, has led to great concerns of what will eventually come of the EU and its currency. As the crisis continues, the role of domestic politics and the negative effects they had on the EU as an institution become apparent. Countries, especially Greece, began to ignore the most crucial aspects of EU agreements, most notably the Maastricht Treaty of 1992. In the Maastricht Treaty, the Greeks ignored basic economic guidelines that must be in place in order to retain membership in the EU with many of the member countries looking the other way. As the Greek domestic policies began to take a toll on its economy, the EU broke its own treaty to help them out.…show more content…
International attention and outrage began to focus on Greece as the cover-up was exposed. The EU had already failed in monitoring Greece’s economy as laid out by the Maastricht Treaty in 1992. The treaty, according to Alessi, had three major monetary points: ensuring inflation was no more than 1.5 percent a year, keeping budget deficits at no more than 3 percent of GDP, maintaining a debt-to-GDP ratio of less than 60 percent. In 2010, according to Alessi Greece had a debt-to-GDP ratio of 144% that was forecast to rise to over 160% by end of 2012, along with a deficit-to-GDP ratio of 10.5%. This outstanding debt, due to Greece’s social policies, most notably its retirement age “at age 50 for women and 55 for men, ” and growing elderly population, where there are more people on social security than working, have helped in Greece’s breach of the Maastricht Treaty. This inability to cooperate with the EU and the EU’s lack of oversight on its guidelines was a major concern on the European continent. Their domestic policies to pay for their societal wants and needs already paralleled that of what the EU wanted. The EU, then, had to decide on what to do. The fight that followed for a salvation of Greece was one of historic proportions, that left many allies pitted against each other and others strange bedfellows. For example, Angela Merkel, Germany PM, supported a financial bailout of the Greek

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