There is a broad consensus on the key issues that will determine the sustainability and efficiency of the eurozone (and the European Union as a whole). These include common mechanisms in Europe, domestic political consensus in the face of the considerable sacrifices imposed on citizens, the functioning of national institutions to introduce necessary reforms; and mutual trust between the member countries.
Those attending this second installment of the Aspen Bosphorus Dialogue embarked on a renewed consideration of the overarching issues stemming from the relationship between the trends unfolding within Europe and the transformations taking place in its neighboring regions.
The current financial crisis has thrown into sharp relief the close links that exist between monetary policy, the banking sector, sovereign debt, and serious imbalances within the Eurozone. The vehemence and longevity of the crisis have called into question the very political structure of the European Union as well as its institutional architecture, both in need of modification through a more rigorous application of existing rules, but also by means of the assignment of new responsibilities and the creation of new mechanisms.
The “European paradox” lies first and foremost in the great potential of the eurozone and the EU as an integrated economic bloc, which remains undeniable despite the serious difficulties of the past few months, and the concerns with the future solidity of the single currency: we are practically witnessing the crisis (hopefully a temporary crisis) of a giant on the global scene.
This international roundtable, which saw the participation of a delegation from the Chinese Ministry of Foreign Affairs, provided an opportunity to discuss developments in the euro crisis and China’s views regarding the same. The core issue debated regarded the nature of the crisis and the motives behind the speculative attacks against certain countries.
Discussions at this national roundtable session got underway with the observation that the idea of introducing European public debt securities – or so-called Eurobonds – is not a new one: indeed, it dates back to 1993 when Jacques Delors proposed, albeit in embryonic form, the issuance of European bonds to finance investment in European Community infrastructure.
The last minute lifeline thrown to Greece to keep it from possible default opened a series of urgent questions on the future of the single currency, Europe as a political entity and, more in general, the relationship between finance and the real economy. The crisis concerned not only the precarious economic and social situation of Greece – which will inevitably have to pass through a period of deep-seated and predictably painful restructuring. It also shed light on the series of actions that should be taken to prevent possible contagion with other European countries.
