The head of the delegation of the European Union to the United States, Joao Vale de Almeida, visited campus Friday to discuss why he thinks the euro will survive the world financial crisis.
Almeida started by talking about the world financial crisis that reached its peak in 2008. He compared the impact of the crisis to the aftermath of earthquakes.
“Like earthquakes, crises have aftershocks … they assume different aspects and touch upon different areas of our economic system,” Almeida said. “What we have in Europe today is an aftershock of the financial crisis of 2008.”
Almeida said the effects are particularly acute in Europe, and in the EU because the countries are part of an integrated economic area.
Leaders dealing with the crisis have to take special considerations because there are 27 countries in the EU.
“We have 27 countries, 27 democracies, 27 governments, 27 oppositions, 27 parliaments, “Almeida said. “It makes a lot of noise.”
Part of that “noise” is a result of the union’s system not being equipped to make the decisions necessary to deal with the urgency of the situation, or to provide relief for those countries most in need.
The EU came to the rescue of Greece, Ireland and Portugal, countries with unsustainable levels of debt and budgetary deficits, to minimize the impact of the economic collapse.
In addition to this, Almeida said, leaders are working with the central banking system to provide more funding so they can react to existing and future crisis situations.
They are also using the situation to introduce fundamental reforms like pension, retirement age, education and financing welfare. Almeida said they have to institute changes that promote growth and innovation.
“Citizens will not support it [reforms] if they do not see the light at the end of the tunnel; if they don’t see the rationale for the sacrifice, meaning more more growth and more jobs,” Almeida said.
Despite these challenges, Almedia said the euro will survive.
“It makes sense to have a single currency. Otherwise the currency becomes an obstacle,” he said. “Imagine if we had gone into this financial crisis with 17 currencies instead of one. Imagine our small countries having to weather the storm throughout this crisis with smaller currencies.”
Another consideration is the euro’s positive history. It has kept inflation at two percent and created more than 16 million jobs in the euro area.
The euro also reinforces the union’s ability to adapt to and influence what happens in other international economic areas.
The euro is a unifying power among the countries; one they cannot afford to lose.
Almeida said the collapse of the euro would be worse than the current crisis. The cost would be far greater and more unpredictable.
“The euro is part of the mechanism and tools that we have to keep these countries, these people and this economy together,” Almeida said.