Solidarity in the EU and the Euro Area

Abstract

Solidarity in the EU/euro area is today a hot topic. The election of the European Parliament showed in May 2014 that anti-integration parties got remarkable supports in many of the EU member countries and became the top gainers in France, the UK and Greece. The EU looks to be faced with a solidarity crisis.

The first objective of this article is to seek why such a solidarity crisis was raised by analyzing sentiments and actions of solidarity, and solidarity-related integration in the EU/euro area. The second objective is to think how they will be able to find a way out of the crisis.

The most important reason of the solidarity crisis seems to be mass unemployment and economic stagnation in the EU the euro area crisis caused. As the Eurobarometer tells us, a positive image towards the EU of the citizens in the countries hit by the euro area crisis dropped tremendously in the midst of the crisis. The extent of the drop is proportional to unemployment rates and the biggest in southern European countries like Greece, Italy and Portugal.

The euro area responded to the financial and sovereign debt crises by advancing economic integration like creating the banking union, strengthening the SGP. The ECB adopted the OMT. But, these measures focus on containing recurrence of the euro crisis and do not aim at strengthening the solidarity in the euro area.

The EU/euro area has been lacking in solidarity actions. Although western European governments and nations criticized the crisis-hit southern European countries as they caused the sovereign crises, big banks of western European countries gave too much credits to the southern countries before the crisis and ballooned bubbles in housing and national finance. So, the western European countries share the blame for the crises.

Germany, a new hegemon in Europe, is a key country. Only Germany could fill today’s solidarity vacuum, since the country has consistently rejected solidarity actions in the economic stimulus policy. A main stream of German economic policy thoughts is that without whips of crisis, there will be no reform. It has some truth. However, today’s crisis in the EU/euro area is not a cyclical, but structural and sticky one. Without governments’ gigantic stimulus policy, European economic stagnation will continue further for a long time and deflation would come true. And it is of increasing concern that countries in distress may elect governments that reject rational policy outright.

This article demands above-mentioned solidarity actions on the EU level, that can revitalize the euro area economy and change landscape of Europe, even though it will be able to continue for several years, maybe a too short term from German eyes.