Eurozone’s renewed vigour comes via a crisis

Despite the many crises experienced by the euro since it went into circulation in 2002, it did, in the broader analysis, help eurozone countries achieve a lot. It contributed significantly to the creation of a major global economic, financial and monetary bloc and a huge market that allows for the smooth movement of goods, services, manpower and capital freely without barriers.

The recent global financial crisis led to an eventual strengthening of the euro. As a consequence, the euro emerged to go back to pre-crisis levels against other major currencies, and especially against the dollar.

Furthermore, the single European currency staved off the collapse of many eurozone countries such as Spain, Italy, Greece, Ireland and Portugal.

For example, Greece got a financial aid package of €240 billion (Dh1.2 trillion), which enabled it to regain its feet and even make some progress three years into the rescue plan. In its last year’s budget, Greece achieved a surplus of €1.5 billion and allocated €1 billion for salary increases, while the economy grew by 0.8 per cent.

Meanwhile, Italy, Spain, Ireland and Portugal achieved even better results, and are now closer to paying back hundreds of billions that were given by the European Central Bank and the rest of EU members, most notably Germany.

Has this remarkable turnaround happened without a price being paid? Of course not, the Eurozone and the European Central Bank are financial and monetary organisations, not charities.

But for the crisis–stricken countries, it helped them bridge gaps and shortcomings, a fact that is evident by the new members joining the eurozone, such as Estonia and Latvia, and the readiness of other countries to join in, like Lithuania and Bulgaria.

Some aspects of how the cost is being managed lies in stricter controls by the Central Bank on financial and monetary issues involving member-states. The arrangement was loose and before the crisis, including the oversight of the budget deficit and public debt, which had crossed the red lines and contributed to the debt overload of many banks and financial institutions.

Have the countries that provided support lost in any way by doing so? Of course not, since most of the funds have been repaid or will soon be repaid to the European Central Bank. And, Germany, the EU’s great economic power, has transplanted its prestigious financial system and stringent financial management to other eurozone countries.

This has added to the administrative and organisational merit at EU organisations, and led to development of new legislation and regulations for a stronger foundation for the single currency.

Among these new rules is the agreement to establish a European financial area governed by unified laws related to budget, public debt and control over banks and setting regulations to ensure compliance with these new rules, which were not in place or not under control before 2008.

The new regulations will preemptively sound the alarm in case of a build up in emergencies or of violations. It would bring in immediate intervention by competent bodies and stakeholders, including the European Central Bank, in order to alert and provide technical and financial assistance to provide solutions to the difficulties.

Thus, despite the severe repercussions of the financial crisis, it provided a great service to the eurozone, which has become stronger and more organised. The interests and affiliations within the United States of Europe have been bolstered in an unprecedented manner.