The impact of the financial crisis to the collective interest of the European Union

Abstract

Back in 1950s, the whole construction of the European Union was based on an effort to replace the ruinous and bloody rivalries of European history, with a new logic based around mutual economic interests. By early 1980s, strong neo-liberal pressures in the global economy had further pushed European governments to converge interests under the umbrella of the European Monetary Union (EMU), as qualitatively a new step in European integration. By early 2000s, the single European currency Euro, became the united Europe's proudest achievement and centerpiece of supranationalism. While externally EMU and Euro were designed to give Europe a chance in global economy, internally they aimed 'politically' cementing Germany to the Community while 'economically' cementing Community to the orthodox monetarist/fiscal policies of Germany. However the unexpected events of the global financial crisis of 2008, global economic crisis of 2009 and the European sovereign debt crisis of 2010, had brutally exposed that the scheme was not working as well as it should. The costs of these crises to Europe were not just financial, but political and social. This thesis attempts to illustrate how the rules of the EMU turned out to be unrealistic, unsuitable, unmanageable, unsustainable, unreliable, unenforced, unsuccessful while the ad-hoc cures to save the EMU had been uncomprehensive, unpopular, unstable and unstabling, as putting all those different economies at different stages of their developments into one basket; turned out to be a "trap" for all parties involved; be it the most powerful Germany or the weaker economies of the single currency.