By Bruce Stokes, Special to CNN
Editor’s note: Bruce Stokes is director of global economic attitudes at the Pew Research Center. The views expressed are his own.
The Great Recession and the ensuing euro crisis have wreaked havoc with the European economy and now threaten to undermine the European Union itself. As Washington prepares to begin negotiations with Brussels on a U.S.-EU free trade agreement, America’s European partner has never been weaker. Europeans’ lack of faith in the European Project and the fissures that have emerged in European public opinion between the French and the Germans bode ill both for efforts to revive the European economy and for effective transatlantic cooperation in the near future.
Support for European economic integration – the idea that if nations lower their trade and investment barriers they will all be better off – is down over the last year in five of the eight European Union countries surveyed by the Pew Research Center in March 2013.
Fewer than a third of Europeans surveyed now think European economic integration has strengthened their economy. This includes just 11 percent of Greeks and Italians and only 22 percent of the French, the latter two citizens of founding members of the European Community. Since the fall of 2009, meanwhile, support for a more integrated European economy has dropped sharply: by 21 points in France, 20 points in Italy, and 16 points in Spain.
This is the latest in a series of entries looking at what we can expect in 2013. Each weekday, a guest analyst will look at the key challenges facing a selected country – and what next year might hold in store.
By José Ignacio Torreblanca, Special to CNN
Editor's note: José Ignacio Torreblanca is a lecturer at UNED University and Head of the European Council on Foreign Relations’ Madrid office.
How does 2013 look for Spain? Is the worst over? The answer to that question depends largely on how “worst” is defined.
The absolute worst scenario, the collapse of the euro, can now be set aside thanks to the decisive action of European Central Bank President Mario Draghi. The wording he chose in a statement on the issue – “I will do whatever it takes to save the euro and, believe me, it will be sufficient” – was exactly what the markets had been waiting for since 2010. Markets now know that betting against the euro could be dangerous.
But this does not mean that the crisis is fully over.
For domestic political reasons, EU leaders are still reluctant to follow Draghi’s lead and do whatever it takes to consolidate the euro. A banking union has been born, but it is still half-baked, while the more ambitious proposals aimed at a fiscal union are still in their infancy. EU leaders are expected to continue with their exasperatingly slow and piecemeal approach. And, especially with German elections looming, expect “too little, too late” to best define the EU’s snail-like progress.
By Nicholas Walton, Special to CNN
Editor's note: Nicholas Walton is the communications director of the European Council on Foreign Relations. The views expressed are his own.
From outside, Europe looks the same as ever – more riots on the streets of sunny Southern European countries and a niggling sense that the Old Continent is still failing to face up to an existential crisis. From inside, the situation is certainly more complicated – and potentially far scarier. Not only is the crisis still very much alive, but it seems to have moved into a third and very worrying phase.
First we had a banking crisis; then we added a sovereign debt crisis; now we also have a political crisis, and one that strikes to the heart of what the European Union was designed to achieve.
Think back a few years to a time when Greeks and Spaniards (not to mention the Portuguese and many, many others) did not routinely head to the streets or go out on strike to protest against the personal disasters that many of them now face. Back then, the European Union brought the promise of a new model of international association that swapped the primacy of the nation state, via the surrender of a fair chunk of sovereignty, for a new way of doing things. At its core were the largest single market in the world and a belief in liberal democracy that united the people of (eventually) 27 member states, with others drawn in by the EU’s powerful magnetic field. The euro was another plank in the long road towards integration, and the Schengen zone of passport-free travel was another proud boast. Then the crisis hit, and the “project” has been creaking ever since.
Editor’s note: Will Marshall is the president and founder of the Progressive Policy Institute. The views in this article are solely those of Will Marshall.
By Will Marshall, Special to CNN
Despite all the attention lavished on the Greek election, the outcome barely registered in Europe’s financial markets. Everyone knows the eurozone’s fate won’t be decided by the shimmering Aegean Sea, but in drizzly Berlin.
Germany is the key, but it’s torn by conflicting impulses. As the main engine of European economic integration, Germany is determined to preserve the 17-nation eurozone. But as Europe’s lender of last resort, it’s loath to bail out countries that took advantage of the euro to borrow extravagantly and live beyond their means.
To avoid such “moral hazard,” German Chancellor Angela Merkel sternly insists that Greece and other debt-ridden nations, notably Spain and Italy, commit to stringent fiscal discipline in return for the loans they need to service their enormous debts and pay their bills. Greek voters were incensed by these Teutonic demands for spending cuts and tax hikes, but they narrowly chose to stick with the euro rather than risking a “Grexit” from the eurozone.
What the “Club Med” countries really need, however, is not a morally bracing dose of austerity, but the kind of structural adjustments that Germany itself undertook — during its “Third Way” phase — to meet the challenges of globalization. The fundamental problem isn’t that these countries are profligate, though some have been. It’s that their economies are uncompetitive, a reality masked until now by a strong common currency.
By Paul Ames, GlobalPost
As Band-Aids go, the 100 billion euro "bailout lite" for Spain looks pretty impressive. But it could be less than a week before the euro zone is confronted with its next existential threat.
Saturday's announcement of massive European aid to Spain's beleaguered banks led to an exuberant market opening on Monday morning. But rescue-weary investors quickly began fretting about the bigger picture — namely, a huge addition to Spain's debt burden. As the euphoria dissipated, European stock markets generally closed down on Monday, and interest rates on Spanish and Italian debt rose sharply.
Expect markets to drop even more next Monday, if Sunday's election in Greece leads to a far-left victory that opens the door for a euro departure.
Spain's rescue immediately became a factor in the Greek election campaign. FULL POST