Tag Archive: E.U

There seems a fundamental paradox in austere measure as an answer to a need for economic growth. Yet the markets seems to be overpowering logical decisions, and progressive economic policies seemed handcuffed by an insatiable need to restore financial stability to global financial institutions.

Indebted Euro zone countries policies are in a strangle hold by the current economic downturn. The markets are demanding those in the red zone act swiftly and aggressively in order to blow out the fuse on the powder keg of instability which is currently planted firmly underneath the Euro. Appeasing the will of the markets is an obligated political commitment and the need to implement austere measures is a political reality.

The rules of the Euro zone necessitate the immediate introduction of punitive cuts in the exchequer coffers of those culprits who have for too long thrown the rule book out the window. Reducing spending, implementing severe cuts and ending the addiction to borrowing by some Member states makes sense holistically for Euro survival.

However for struggling Euro economics this represents the ultimate paradox. Economic growth is the engine to drive a crippled state out of recession. With growth comes employment, with employment comes tax generation/welfare alleviation all of which contribute in a progressive fashion to the erosion of national debt.

While European political will is very much in favour of halting the brakes on borrowing and paying back the backers by any means necessary. This will is shaped by a ferocious need to protect the Euro, but conversely the need to protect the Euro is most sacrosanct to these very borrowers in the first place.

Staying alive in the Euro zone is going to become increasingly more hazardous on the socio-economic structure of struggling Euro countries. The rules of the game have changed and many may begin to question; is competing in the Euro zone and abiding by its accompanying rules beneficial or a bulwark against true recovery? Is the survival route being applied by most governments the only method of salvation?

A subservient method of applying beneficial Euro-centric policy to the behest of the national economy is the current prescription, alternatives are muted and perceived as potential fractious to European stability.

Perhaps a new departure is on the horizon but intrinsic foreboding about market retaliation is clouding any new vision.

The Euro is continually slipping towards parity with the dollar, regardless of the frantic implementation of bailout reserves, austere measures and staunch financial regulation. Perhaps a European wide solution is not the true answer to staying alive in the Euro zone. Devaluation of the Euro is not an option as no one country is singing from the same hymn sheet. A dislocation of indebted member states to revert to a national currency, devaluing it and leaving the remaining “strong economies” to restore confidence to Euro stability maybe the only way to stem the fate of the currency.

Political will is diametrical opposed to this notion at present but is it plausible that any indebted countries government can survive a new tenure while subsequently applying furiously the necessary means to keep the Euro afloat. Something will have to give and unfortunately the current toeing of the line may have damming repercussions which could paralysis many economies and their citizens .


The fear of on an economic outbreak perpetrated by the “contagious “Greeks, and the foreboding forecasts of a wave of financial instability consuming the Euro zone have prompted E.U Commission to take a drastic stance encompassing a potential inflammatory budget review process.

The commission is advocating the implementation of a “peer review process”, where effectively national sovereign member states would submit their budgets for approval by the Commission. The review process would act as a preventive measure to ensure economic harmony and act as a defense against potentially destabilizing fiscal policy.If unharmonious policy was enacted it would have detrimental consequences to the valuation of the Euro and effectively devalue other member states economies, and in this lies the premise for the Commission’s actions.

The implication of this move could be potential shattering to the solidarity of the European Union. The emergence of a fractured European Union is a real possibility.

Take the hypotheses of an indebted member state in a position where its Government is unable to enacted tough austerity measures which are the perennial prerequisite of any current bailout package. The Euro zone bailout reserve will be forced to provide funds even though the Government is unable to meet the requirements of its lenders. The alternative; to refuse funding is utterly unpalatable. It would have a domino effect of instability on other member states, particularly in the strength of the Euro.

The Budget review process would try to act as a combatant to this happening in the first place, and would act as a progressive form of economic governance and undoubtedly would give the Commission the ability to pre-approve bailout countries budgets ensuring economic harmony.

The fundamental problem that may arise from this is that the tenure of any Government under the current climate is on shaky ground. In the case of a further bailout to a member state, there could very well be a rapid turnover of Government. The incoming Government will undoubtedly have to appease public opinion and undoubtedly dilute austere policies and in some cases abandon them. The consequences would be dire and other member states would undoubtedly call for harsh repercussions and in extreme cases expulsion from the Euro zone.

Olli Rehn, Europe’s economic and monetary affairs commissioner stated: “Coordination of fiscal policy has to be conducted in advance, in order to ensure that national budgets are consistent with the European dimension, that they don’t put at risk the stability of the other member states”

The dwarfing of sovereign fiscal autonomy is not new to member states, their very presence in the E.U is a commitment to a higher authority. However the national Budget is the ultimate in economic autonomy and the Big Brother Budget review process will inevitable be taken on the premise of “what is good for European economic harmony? “ and the needs of a domestic national economy will inevitably be marginalised.

Austere measures imposed by a national government are bitter pill for most to swallow, but the implementation by a supranational body of these measures with the primary goal of Euro zone stability, would be comparative to asking citizens to swallow a rugby ball, it wouldn’t fly and the backlash would range from protest, to calls for referendums on an exit of the Euro zone.

The complex between indebted member states wanting what’s best for them tempered by stable member states refusal to be weighed down by these reckless states may be the impetuous for a radical overhaul of the composition of the Euro zone. The creation of a fractured E.U is a distinct possibility with the relative solvent in one corner and fiscally defunct in the other. The Budget review process may be the catalyst to accelerate this dynamic and invariably bring about the beginning of the end of the European Dream.

E.U Leadership Up In Smoke

As the skies open again, and the ash slowly dissipates into the horizon, there is still plenty of hot air about as analysts and political commentators begin to pick through the remnants of the volcanic ash crisis and inevitably seek out a guilty party to blame.

Consumer compensation, Aviation operators aliments and a staunch defence from regulatory bodies have all been thrown into the cauldron. This hot-pot of conflict has raised some fascinating points. In regard to crises we as a society seem to over regulate in relation to personal safety, and under regulate with regard to issues that have a far more detrimental impact on society as a whole i.e Financial Regulation.

However there is a common theme in regard to both areas, a lackluster and lethargic response from the most enormous and influential supranational regulatory body in the world: The European Union.There has for a long period ,arguable since its inception, been economic harmony in the E.U., conversely political harmony has always been its Achilles heel.

The absence of a collaborative harmonious and swift response to various crises has continually highlighted the absence of both leadership at a European level and its inability to react promptly and effectively to real-time situations.

Achieving an effective crisis management strategy should not be solely obsessed with preventative and containment measures. Although preventative action in order to contain immediate danger is the first port of call. A more inclusive reactionary approach to crisis management including all the major political actors in real-time should be immediately enacted once containment of the crisis is achieved.

The closing of Europe’s skylines and the sluggish response reeked of ineffectiveness.

The European Presidency should have a played a much more proactive role in the handling of the crisis. An immediate meeting of the Council Meetings should have been called in order to give a prudent risk assessment, inform aviation operators of an approximation of the ban,clearly outline the economic consequences and provide information on any assistance to both passengers/airlines that may or may not be provided. Relaying the outcomes of the meeting to the various member states populations in one voice would have reinforced confidence and may have alleviated some passenger concerns.

“This is a European embarrassment and… a European mess.”- IATA chief Giovanni Bisignani

Unfortunately it took 5 days for a European response to a problem that had misplaced and stranded thousands, created an economic fallout greater than the immediate grounding of planes after 9/11 and once again shattered public confidence in the effectiveness of an E.U response to an E.U crisis.