Saturday

27th Nov 2021

Opinion

Eurozone needs institutional reform

  • The eurozone can no longer function as it is today (Photo: guysie)

One year before the European elections in May 2019, the eurozone is facing a series of challenges related to its architecture and its structural weaknesses.

The current fiscal policy framework is ineffective, as it has strengthened social and regional disparities and increased fiscal gaps between the periphery and the powerful European North.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Public investments are not increasing, tight fiscal policies are still resisting against the promotion of a robust growth model, and despite the relative stabilization and growth that eurozone has shown over the last couple of years, the roots and causes of the 2008 financial crisis have not been fully addressed.

The crisis in Italy is coming to intensify the pressure on institutional reform, for which we have heard a lot, but we have seen little.

The delay in pushing for the necessary changes in Eurozone architecture is not just worrying but it may further enhance the eurosceptic and populist bloc and further exacerbate the already intense disappointment of a large part of European citizens over the implemented policies.

In this context, there are also positive developments.

The new socialist government in Spain, led by Pedro Sanchez, the Costa government in Portugal and the Tsipras government in Greece are three very interesting progressive political projects.

All three leaders are attempting to reshape the political balances in the EU and eurozone and to step up efforts towards achieving sustainable development, social and regional convergence.

The key initiatives and proposals of the progressive bloc at the European Council and the European Parliament focus on changing the fiscal policy priorities and protecting the weaker social groups, while at the same time increasing the resources of the European budget, pushing for tax harmonisation, strengthening cohesion policies, addressing social inequalities, improving burden-sharing and risk management within the Eurozone.

No more neo-liberalism

To put it simply, these forces are against the neo-liberal austerity policies, and the extreme populism and far-right euroscepticism that has grown during the recent years in many member-states.

It is, thus, important for the eurozone to choose its direction and decide on its next policy path.

Dilemmas are specific, risks are imminent, as imminent are the proposals of each side. The proposals of Tsipras, Costa and Macron are moving towards convergence and can be considered as positive, while Merkel does not want to change the existing balance of power and alter the substance of the current fiscal policies.

The eurozone can no longer function as it is today.

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

Therefore, we have to change course, as we will find ourselves for another time confronted with everything that has led Europe to the financial crisis ten years ago.

Such a negative development would be painful for our societies and the European project altogether.

Dimitris Papadimoulis is vice-president of the European Parliament, and head of Syriza party delegation

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

Analysis

EU mulls post-Brexit balance of euro and non-eurozone states

Brexit will dramatically change the balance between EU members states that have the euro and those that don't. The thinking on the future of the eurozone is done at EU-27 level - but opposing camps will have to be reconciled.

Challenges for new Franco-German eurozone plan

With both Macron and Merkel losing support domestically, it is questionable whether their plans will succeed. Even more so, given the opposition by the Hanseatic states, the upcoming European elections and Italy's political hooliganism.

This 'Black Friday' is a turning point in corporate accountability

Much supply-chain abuse remains hidden from plain sight – not only to consumers but to the companies themselves, who have built increasingly longer, more complicated, and more opaque supply chains, which have become harder to monitor, control and account for.

The South China Sea should be of concern to Europe

If China is allowed unimpeded to break the law of the sea in the South China Sea, think about the repercussions elsewhere. It could ricochet into Europe's High North. In the Arctic, Nordic nations have overlapping claims with Russia.

News in Brief

  1. Covid variant: EU to block travel from southern Africa
  2. France and UK seek EU help on Channel migrants
  3. New Swedish PM who resigned after 7 hours gets second chance
  4. Belgium to decide on Friday on Covid measures
  5. UK rings alarm on new Covid strain in South Africa
  6. Turkish police use tear gas at women's rights march
  7. Poland calls for more Nato troops
  8. Ex-Navalny aide leaves Russia

Have the Polish people finally had enough?

Sitting justice minister Zbigniew Ziobro down on the same bench as Congolese warlord Thomas Lubanga or Sudanese dictator Omar al-Bashir might seem like a longshot, if not overkill - but shows just how desperate the Polish people have become.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew report reveals bad environmental habits
  2. Nordic Council of MinistersImproving the integration of young refugees
  3. Nordic Council of MinistersNATO Secretary General guest at the Session of the Nordic Council
  4. Nordic Council of MinistersCan you love whoever you want in care homes?
  5. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  6. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals

Latest News

  1. Belgium goes into three-week 'lockdown light'
  2. MEPs list crimes of 'Kremlin proxy' mercenaries
  3. EU to open up 'black box' of political ads
  4. Can the ECB solve climate change and inflation on its own?
  5. EU set to limit vaccine certificate to nine months
  6. Surprise coalition in Romania without former Renew's Ciolos
  7. This 'Black Friday' is a turning point in corporate accountability
  8. West struggling to show strength on Ukraine

Join EUobserver

Support quality EU news

Join us