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Journal of Economic Integration 2012 March;27(1) :33-79.
Is the Eurozone Rescue Strategy Tantamount to the Rearrangement of the Deckchairs on the Titanic?

Miroslav N. Jovanovié 

European Institute, University of Geneva, rue Daniel Colladon 2, 1204 Geneva, Switzerland, Tel: +41229172493, E-mail:
Copyright ©2012 Journal of Economic Integration

The eurozone is the crown jewel in the process of European integration. This monetary zone includes the most advanced integration grouping of countries in the European Union. The eurozone has been expanding the number of its participants, a sign of success in any economic or political union. Politicians promised citizens stability and perpetual economic progress at the time of the eurozone inauguration (1999). This monetary integration has been a predominantly political process which neglected certain economic fundamentals for long term durability. These include federal-type intra-group fund transfers and orientation towards economic growth. Certain eurozone flaws appeared, raising powerful doubts about its survival. Some of the internal troubles of the eurozone such as an endemic lack of respect of rules, were amplified by the global credit crunch, bringing into question the initial promises made to citizens. A series of rescue operations commenced in 2010. Too much political and economic capital has been invested in the eurozone, to the extent that its statesmen will do everything they can to rescue it. If its participants believe the deal to be beneficial, the eurozone will continue its existence, but several federal-type amendments are necessary. Otherwise, the eurozone may join the ranks of a series of European monetary zones that have disintegrated over the past two centuries. The bloc’s citizens (and others) are unwitting observers of a slow motion eurozone train crash. Even though the eurozone burdens some of its member countries with high costs, its break-up or countries’ departure from it may prove even worse, but not inconceivable.

JEL Classification: F31, F33, F36

Keywords: EMU | Eurozone | Rescue | Bailout | Break Up | Deficit | Debt | Bond | Germany | France | Greece
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