Reuters :
Four great crises around Europe’s fringes threaten to engulf the European Union, potentially setting the ambitious post-war unification project back by decades.
The EU’s unity, solidarity and international standing are at risk from Greece’s debt, Russia’s role in Ukraine, Britain’s attempt to change its relationship with the bloc, and Mediterranean migration.
Failure to cope adequately with any one of these would worsen the others, amplifying the perils confronting “Project Europe”.
Greece’s default and the risk, dubbed ‘Grexit’, that it may crash out of the shared euro currency is the most immediate challenge to the long-standing notion of an “ever closer union” of European states and peoples.
“The longer-term consequences of Grexit would affect the European project as a whole. It would set a precedent and it would further undermine the raison d’être of the EU,” Fabian Zuleeg and Janis Emmanouilidis wrote in an analysis for the European Policy Centre think-tank.
Though Greece accounts for barely 2 percent of the euro zone’s economic output and of the EU’s population, its state bankruptcy after two bailouts in which euro zone partners lent it nearly 200 billion euros ($220 billion) is a massive blow to EU prestige.
Even before the outcome of Sunday’s Greek referendum was known, the atmosphere in Brussels was thick with recrimination – Greeks blaming Germans, most others blaming Greeks, Keynesian economists blaming a blinkered obsession with austerity, EU officials emphasising the success of bailouts elsewhere in the bloc.
While its fate is still uncertain, Athens has already shown that the euro’s founders were deluded when they declared that membership of Europe’s single currency was unbreakable.
Now its partners may try to slam the stable door behind Greece and take rapid steps to bind the remaining members closer together, perhaps repairing some of the initial design flaws of monetary union, though German opposition is likely to prevent any move towards joint government bond issuance.
The next time recession or a spike in sovereign bond yields shakes the euro zone, markets will remember the Greek precedent.
An economic collapse of Greece, apart from the suffering it would cause and the lost billions for European taxpayers, could aggravate all three of Europe’s other crises and destabilise the fragile southern Balkans.
With tension already high in the eastern Mediterranean due to civil war in Syria, the eternal Israeli-Palestinian conflict, the unresolved division of Cyprus and disputes over offshore gas fields, a shattered Greece might turn to Russia for help. In exchange, it might veto the next extension of EU sanctions against Moscow, or even offer access to naval facilities once used by the United States.
Athens is already struggling with an influx of refugees from the Syrian and Iraqi conflicts who wash up on its Aegean islands, seeking the safest transit route to Europe’s prosperous heartland in Germany or Sweden.
Cash-starved Greek authorities are more than happy to see them head north in search of asylum elsewhere in the EU. It is not hard to imagine a government cast out of the euro zone using migrants as a means of piling pressure on EU countries.
The “boat people” crisis has proved divisive in the EU, with Italy and other frontline states accusing their northern and eastern partners of lacking solidarity by refusing to co-finance or take in quotas of refugees. Britain has refused to take any.
Failure to resolve Greece’s debt crisis after five years of wrangling makes the EU look weak and divided in the eyes of Russian President Vladimir Putin, Chinese President Xi Jinping and others looking to expand their power.
Four great crises around Europe’s fringes threaten to engulf the European Union, potentially setting the ambitious post-war unification project back by decades.
The EU’s unity, solidarity and international standing are at risk from Greece’s debt, Russia’s role in Ukraine, Britain’s attempt to change its relationship with the bloc, and Mediterranean migration.
Failure to cope adequately with any one of these would worsen the others, amplifying the perils confronting “Project Europe”.
Greece’s default and the risk, dubbed ‘Grexit’, that it may crash out of the shared euro currency is the most immediate challenge to the long-standing notion of an “ever closer union” of European states and peoples.
“The longer-term consequences of Grexit would affect the European project as a whole. It would set a precedent and it would further undermine the raison d’être of the EU,” Fabian Zuleeg and Janis Emmanouilidis wrote in an analysis for the European Policy Centre think-tank.
Though Greece accounts for barely 2 percent of the euro zone’s economic output and of the EU’s population, its state bankruptcy after two bailouts in which euro zone partners lent it nearly 200 billion euros ($220 billion) is a massive blow to EU prestige.
Even before the outcome of Sunday’s Greek referendum was known, the atmosphere in Brussels was thick with recrimination – Greeks blaming Germans, most others blaming Greeks, Keynesian economists blaming a blinkered obsession with austerity, EU officials emphasising the success of bailouts elsewhere in the bloc.
While its fate is still uncertain, Athens has already shown that the euro’s founders were deluded when they declared that membership of Europe’s single currency was unbreakable.
Now its partners may try to slam the stable door behind Greece and take rapid steps to bind the remaining members closer together, perhaps repairing some of the initial design flaws of monetary union, though German opposition is likely to prevent any move towards joint government bond issuance.
The next time recession or a spike in sovereign bond yields shakes the euro zone, markets will remember the Greek precedent.
An economic collapse of Greece, apart from the suffering it would cause and the lost billions for European taxpayers, could aggravate all three of Europe’s other crises and destabilise the fragile southern Balkans.
With tension already high in the eastern Mediterranean due to civil war in Syria, the eternal Israeli-Palestinian conflict, the unresolved division of Cyprus and disputes over offshore gas fields, a shattered Greece might turn to Russia for help. In exchange, it might veto the next extension of EU sanctions against Moscow, or even offer access to naval facilities once used by the United States.
Athens is already struggling with an influx of refugees from the Syrian and Iraqi conflicts who wash up on its Aegean islands, seeking the safest transit route to Europe’s prosperous heartland in Germany or Sweden.
Cash-starved Greek authorities are more than happy to see them head north in search of asylum elsewhere in the EU. It is not hard to imagine a government cast out of the euro zone using migrants as a means of piling pressure on EU countries.
The “boat people” crisis has proved divisive in the EU, with Italy and other frontline states accusing their northern and eastern partners of lacking solidarity by refusing to co-finance or take in quotas of refugees. Britain has refused to take any.
Failure to resolve Greece’s debt crisis after five years of wrangling makes the EU look weak and divided in the eyes of Russian President Vladimir Putin, Chinese President Xi Jinping and others looking to expand their power.
