EU debt crisis

The eurozone crisis is, essentially, a crisis about state debt.

That means that whatever immediate measures are taken, the most important long-term goal will remain a need to reduce state deficits and reduce debt overall.

So far, all we have done is put out fires - and that won't work in the long run.

It is right to want to regulate and exercise greater control over financial markets.

But financial markets are also indispensable as instruments of discipline because they are unforgiving and expose the weaknesses of heavily indebted countries.

It is true that the first wave of bank bailouts after 2008 and the subsequent stimulus packages initially increased the burden of debt, but this crisis would have come regardless - even if a few years later.

Hard facts

Despite this, there are those who still want to simply mask the hard facts.

Greece will receive a further tranche of its bailout package - although the relevant numbers don't add up and politicians had promised there would be no more cash.

And France would prefer to finance states by printing new money.

But if you look at the non-euro-land Britain, you can see what that would mean in the future.

If inflation in Britain stays at its current level of over five percent for the next decade, the British state will have paid off a good deal of its debt, but any savings the country makes will be worth half as much.

Now look at Italy, where Prime Minister Silvio Berlusconi has yet to realize the severity of the situation.

After Greece, Italy has the second highest level of debt in the eurozone and its economy is stagnant.

Forgotten stability pact

German Chancellor Angela Merkel says the only way forward is to renegotiate EU treaties to give eurozone members real rights to take action against states guilty of long-term debt.

It is as if the EU's stability and growth pact never existed - a pact, which Germany instigated but then repeatedly ignored!

Why would eurozone states allow themselves to be controlled by a single EU finance minister or an economic “super commissioner” (or whatever the institution would be called), when they have ignored the stability pact when things have got unpleasant?

Courage for change

A full departure from Europe's debt economy would herald a new era.

All European countries have over the decades become accustomed to standards that have been financed with debt and ever new debt.

The party is over - and Europe's citizens have known it for some time.

They certainly want the burden to be spread evenly and they are now more resilient to politicians trying to buy votes with promises they cannot keep.

But one can only hope that the pressure for real change is big enough.

Author: Christoph Hasselbach, Brussels / za
Editor: Nicole Goebel