Impact Of Euro Crisis On European States

The Euro crisis had significantly affected the economy and labour markets adversely, with unemployment rates in Spain and Greece escalating up to 27%, therefore, Euro crisis was to blame for subdued economic growth for both Eurozone and the entire European Union. The whole European states have suffered economically and politically from the consequences of the euro crisis, but not much as the 'peripheral' states which have been affected more than others. The Euro peripheral States has been facing three significant economic challenges which are public deficits and high levels of debts, also an economic recession which led to a huge amount of austerity and a high unemployment level. It has been described by the European institution as a ‘political immaturity’ by the European periphery States. Thus, this affected the electoral system in Europe by the rise of opposition parties, because the crisis restricted fiscal constraints on various national governments. Regard to this many voters felt disappointed and start to turn their back on the traditional parties and instead they choose to vote for a new or an existed challenger party that refused the of austerity and European integration which was assented by mainstream

This essay examines how the voters affected by the economic crisis punished the mainstream parties in the government by voting for challenger parties, choosing the challenger parties by the voters was by voting for who consider three main cases that directly connected to the euro crisis which is European integration, austerity and immigration. The essay will be comparing between three States which is Italy, Greek and Spain based on the electoral system aftermath the euro crisis.

The euro crises revealed various Euro defects and opened a wide range of financial system issues and bank operating system and diverse financial institutions (Corsetti et al., 2019). Despite the diverse rescue policies enacted, certainly those based on support offered by government to financial institutions, was projected to solve, contain and recover from the Euro crisis. However, these solutions have been ineffective due to the ripple effects to countries inclusive of budget deficit, debt and severe fiscal policy. Moreover, the crisis created a doubt by deteriorating the situation which impacted political crisis and nationalism development, and as a result some politicians are willful to fully control their monetary policies, thus withdraw their countries from common currency.

Mobilization of public implies to overcome the drama, the Euro crises has demonstrated that EU is the single economic actor which recognizes its own rationality and its powerful institutions, which focuses on the general interests differently from private sector, and can consider undertaking strict decisions when the economy is on the decline (Barbieri, Campus & Mazzoni, 2019) .Additionally, the crisis threatened the markets capability to self -regulate itself and emphasized adequate legal framework necessity in both Euro-zone and European inclusive of international level to minimize the scale and duration of the recession and also to curb another deeper and unexpected crisis from occurring.

The Crisis has also outlined the needs and limits for a common action of European Also the Euro crisis reopened the public authorities’ role in the economy and the responsibility debate (Barbieri, Campus & Mazzoni, 2019. Suggestively, the ideal solution would be tight credit access conditions in the Euro zone banks, acting and collaborating for the common interest and reducing competition. Additionally, it would also be essential to strengthen the financial institutions assessment model risks by introducing an informative notation system about the risk assessment quality therefore finally reforming the Euro-zone budget, monetary policy and terms and fiscal.

A unified and strong financial regulation board that controls the country member’s public budget would reduce deflection, thus gaining stability and stimulating economic growth and creates wealth for all members .Since the formation of Euro till today, it is always subjected to various economists, syndicates, political leaders and civil society critics (Arestis, & Sawyer, 2019). The Euro zone and European Union future is unclear

Firstly, it wasn’t a choice for various national governments during the euro crisis to not accept the structural reforms the national governments argument was ‘There is no alternative’, so the austerity was necessary. The European Union and the International Monetary Fund accepted to bailout the government’s debtor states, but in return that government should impose structural reforms and serious spending cuts which have made the external constrains on the national governments especially in those countries coupled with sovereign debt crisis (Frieden & Walter,2019). The crisis emergency politics have significantly reduced the political alternatives available to citizens.

The reaction of the voters was strong by refusing the traditional parties and voting to challenger parties. there are many examples of a success challenger party after the tragic euro crisis, such as the five-star movement in Italy, and Podemos in Spain and the most notable challenger party the radical left-wing Syriza from Greece who won the election and led the government in 2015 (Font, Graziano & Tsakatika, 2019).Voter chooses the challenger parties because they reject the mainstream decision to the crisis. Both left and right mainstream decided to authorize the austerity policy and commit to the EU guidelines for fiscal policy-making. Whereas on the left, the austerity policy was rejected by challenger parties and criticized the EU’s insistence to reduce government welfare expenditure. On the right, they focused on reclaiming national sovereignty, their aim was to control immigration and take back the power from the EU. As it is stated above, both left and right challenger parties rejected the mainstream ‘there is no alternative’ argument, they claim that states destiny should be controlled by their own governments as they can present distinct policies Hobolt & Tilley,2016).

In Spain, between in 2010 and 2011 all the three elections were surprisingly marked by a dramatic drop in the vote for the Socialists. The voters accused Zapatero of being in- charge for not responding to the economic crisis and to the unexpected change ‘from an expansionary economic policy to fiscal retrenchment which made the socialist voters to feel betrayed. That clearly impacted on the Catalan parliament election in November 2010, the socialist, a leading party in the Catalan regional government fall to their lowest level ever in Catalonia, by losing 8.4 % of the total vote (Mueller, 2019).The Spanish socialist party POSE lost governing several regions, and in the municipal election the POSE vote has gone down to 27.8 per cent, compared with the previous elections of 2007 it counts as falling by 7.1 per cent of the total vote. Also, after six months, in the national parliament elections of Nov 2011 the socialist vote hugely reduced by 15.1 per cent, down from 43.9 to 28.8 per cent. Even after the loss of the main party in Spain the official oppositions didn’t take over, what happened in Spain was by the end of 2011 it seems that Partido Popular center-right party have become the hegemonic in the Spanish politics. Unlike the socialist party who lost 15.1 from their total vote, the PP vote increased by 4.7 per cent, six months before that in the domestic and regional elections, the PP vote increased as well by 2.1 percent which is ‘less than one-third of the socialists’ 7.1 % drop’. Therefore, the dominance of the new party in Spanish politics wasn’t considered on a significant extension of its electoral base (Bosco & Verney, 2016)

In Italy, in May 2011 local elections the center-right governing coalition won only 40 of the 133 municipalities. this was a blow to the prime minister Berlusconi and his government, which led him personally lead the campaign on behalf of the venter-right candidate, who lost by a margin of over ten per cent in the second round. Italy provides another example of how fail of the center parliament didn’t benefit the opposition. So, in Italy the Berlusconi’s humiliation brought a limited benefit to the center-left opposition. The opposition gained nine of the municipalities with over 15,000 residents; however they suffered a declining in vote by 1.2 per cent compared with the previous year elections (Bosco & Verney, 2016).

In Greece, the two main parties became unreliable because of their policy of sharply reducing wages and social supply, a requirement for expensive loans to cover government debts. In the new elections of 6 May 2012, the punishment for the two main parties was unprecedented. Since the 2009 elections, within thirty months, they have lost nearly 3.3 million votes as follows: pasok lost 2.2 million votes while the nd lost 1.1 million votes. This figure represents 47 per cent of those who voted in 2009. pasok fall to only 13.2 per cent, where in 2009 it was 43.9 percent, while nd got just 18.9 per cent, it was 33.4 per cent in 2009. whereas the left coalition of SYRIZA, secured more than treble its vote share to 16.8 per cent (Bosco & Verney, 2016).

It’s clear that from the result above that the voters defecting from mainstream to challengers’ parties are those affected by the negative economic factors. And it’s true that it doesn’t matter for the voter to if the party who they voted for in the previous elections is still governing or not, they vote against all mainstream parties (Hobolt & Tilley, 2016).

From the onset, the European politician leaders initiative of creation of European monitory union, the Euro, like the USA dollar, it did not satisfy many economists for instance Jan, Tinbergen and Robert Mundell both Nobel Prizes who were pessimistic about the idea because based on their opinion, the existence of various barriers such as differences in fiscal and monetary policies and language diversities amongst others would fail (Canale & Mirdala, 2019). However, it was incredible that after the introduction of Euro it gained value against dollars and several other currencies and was ranked the second currency alongside the dollar .The Euro created a common market with a single currency without fluctuations of the exchange rate. To this end wealth and prosperity for all members was created and strengthened the European role as an economic power until the subprime crisis “approval of borrowers loans, though they could not afford” which created an international finance upset since 2008,starting a debt crisis in 2010 at Greece and the Ireland public debt crisis triggering the initial financial crisis and the subsequent economic crisis in the Euro zone and the entire EU ,thus confirming the fear of the economists during the initiation of the Euro project. The EU financial regulation has contained the crisis though it has not been able to fully solve this crisis. Moreover, the area has been coupled with political crisis (disparities among significant policymaker over the ideal crisis exist solution). Governments in the diverse European countries have collapsed as a result of indirect or direct crisis.

References

• Arestis, P., & Sawyer, M. (2019). European integration and the ‘euro project’. In The Handbook of Globalisation, Third Edition. Edward Elgar Publishing.
• Barbieri, G., Campus, D., & Mazzoni, M. (2019). How the EU member states’ press represented the Euro Crisis. Journalism, 20(2), 235-255..
• Bosco, A., & Verney, S. (2016). Elections in Hard Times: Southern Europe 2010-11. Routledge.
• Canale, R. R., & Mirdala, R. (2019). Fiscal and Monetary Policy in the Eurozone: Theoretical Concepts and Empirical Evidence. Emerald Publishing Limited.
• Corsetti, G., Eichengreen, B., Hale, G., & Tallmann, E. (2019). The Euro Crisis in the Mirror of the EM