The Euro Is Political Project That Was Doomed to Failure - Coursework Example

The Euro is Political Project that was Doomed to Failure. Discuss. The Euro is Political Project that was Doomed to Failure. Discuss. Introduction Since the inception of the European Union (EU), the Union has developed and grown through the creation of policies that are geared towards making it a more effective and influential global body. Over the years, some of the policies have been done away with others have been introduced, while the rest have been modified. All these changes in the policies have been to ensure that the various aspects defining the EU’s abilities in regard to a common market, international influence, and a currency for the whole region. However, in the establishment of some of these aims, there have been challenges and successes. The ratio of these challenges and successes has determined how well the EU has accomplished its goals. Of essence in the existence of the EU has been the Euro, which is the common currency. According to Hamori and Hamori (2010), the Euro was introduced as the solitary currency for eleven countries that were part of the EU. It was the first step towards a monetary policy regulated by the European Central Bank (ECB). Since then, the number of countries using the currency has grown to nineteen, which may be considered as a success. However, digging deeper into details, the opposite may be the consideration. As a result, this brings about the paper’s main agenda, which is the discussion of the Euro as a political project that was destined to failure. Several questions will be answered in the paper’s discussion.They are the meaning of a political project, if the Euro was a such a project, if it was, how and why. What does failure imply, was failure foretold in regard to the Euro, if it was, on what basis and why. Has the Euro been unsuccessful, if it has, why and in what ways is the failure associated to it being a political project. According to Switalski (2014) Europe is a political project that was conceived out of history. Europe as it is now under the EU and the several countries out of the EU forming the Eurozone, was founded by persons whose main aim was to free Europe from the effects country to country rivalries for resources and to ensure that all European countries were liberated from governments that were tyrannical both in ideological aspects and nature. Hence, the uniqueness of the EU was born from the desire to redefine the association of European countries when it came to the respective shared interests that they all had. As such, in this context of the EU and the Eurozone, a political project can be defined as a scheme that is created by different national governments in order to pursue certain aims and goals that pertain to the success or achievement of their national interests. The political project goes beyond the confines of politics in the respective countries to include a wide range of constituents such as resources and currency. Since the creation of the EU, Europe has gone through an era of peace and tranquility, which has been associated to the European political project. Nevertheless, the Euro has been the major issue concerning the union. It has resulted in a number of actions and crisis that have deeply affected the EU. For one, it can be said that being a part of the EU, and bearing the biggest influence, the Euro is a political project too. What directs to this conclusion? As per JEF Secretariat (2013), it has been described as the Eurozone political partnership. Under the Eurozone political alliance, there is the aim to an increased economic and financial policy. The consideration here is that the Euro is a political project for various reasons. One, if it is regarded as an economic idea, it fails to add up or make sense. In order to comprehend this, one has to contemplate the countries using the Euro as their currency. These countries, nineteen in number form the Eurozone. By doing so, the economic idea of the Euro becomes invalid, and the political project notion comes to life. Of mot importance is that the Euro as a political project aims at a greater amalgamation of all European nations (Mayer, 2012). In fact, most of the countries that use the Euro are not even major trading associates. For example, Finland’s major trade partner is Sweden. Hence, the question that would be asked is why then is such a country using the Euro along with countries that do not constitute its major trading partner or partners. Again, the Euro as a currency is used by several countries that form a wide array of economies. Some of the economies are strong while some are weak, rather than add up as an economic solution to this issue, it fails, leading to the conclusion that in principle, it is a political project. For example, Greece’s economy is weak while that of Germany is strong, the standards of living are so different, yet they all use the Euro (Mayes & Wood, 2007). As a political project, the Euro was put up as a follow up to the formation of the joint institutions that regulated the manufacture and production of resources like Steel and Coal. The aim here was to limit the ability of countries to generate materials for war. Consequently, there was the need to have one currency for use by these countries. In addition, the EU wants a deeper union, which the Euro avails (Kaczorowska, 2013). In fact, it is hard to differentiate the Euro from the EU’s ambitions that are politically constituted. Even though the EU leaders try to sell the concept of the Euro to country’s like the United Kingdom (UK) as an economic project, evaluation by one Bootle shows that the EU has always had political aims that cannot be differentiated from the Euro (Croucher, 2014). Moreover, the Euro has always taken centre stage when it comes to Europe. As was stated in 1949 by Rueff, European unity and cooperation would be fostered by money. Hence, the Euro was planned to enhance stability through a set of rules stipulated in the Stability and Growth Pact, which were vital in deterring conflict within the European region. Furthermore, the Euro is a political project as it guaranteed prosperity. The understanding was that it would trigger the wheel of real association (Weidmann, 2013). However, now, the Euro has not quite worked out well. Consequently, the question of failure arises. What is failure in the context of the Euro? Failure can be defined as the inability to accomplish the set goals and aims (Cardone, 2011). Hence, to what extent has a project attained its desired end. If it has not or it has only to a little extent, then this is deemed as failure. Indeed, when it comes to the Euro, failure was foretold. In fact, it was done before the conceptualisation and realisation of the Euro. Feldestein (1992), did categorically state in his report in 1992, the Euro was an economic problem. The statement was an answer to the debate that was ongoing on the prudence of adopting the Euro, especially considering it was a political project. Feldestein (1992) did predict that the Euro would actually reduce rather than increase trade inside Europe. In the predictions, he also opined that it would decrease the economic health of Europe. How would it do this? It would decrease Europe’s health through an increase in the unemployment rates of the future while also raising the recurring unpredictability of activity inside each specific European countries. Further, he added that the Euro could lead to an increased inflation rate; much more than what could was being experienced at the time under the existing monetary agreements. Feldestein (1992) argued that the aims for having the Euro were misguided due to their political basis of wanting to create a super-nation. In fact, he stipulated that the adoption of the Euro did not offer the best options because for example, if the product demand in one nation reduces, then that country would experience decreased output and increased employment, which would only be helped by a price and wage reduction. However, under the Euro, his opinion was that it would hinder mitigation of the arising problems using reduced rates of domestic interests. In addition, the Euro would also prevent flexibility in the rates of exchange. As indicated, the predictions of the Euro’s failure did exist; however, they were ignored. Why? They were ignored because supporters of the Euro had different ideas. One, they argued that the argument on the variations around exchange rates among different regions would cease to make sense once the Euro was adopted. They also claimed that the Euro could lead to the building of a bigger financial market through a decrease in the price of transactions. The predictions were also rejected on the argument that it would align the idea of free trade within the European market (Commission of the European Communities, 1990). With existing predictions of failure by the Euro, and the subsequent assumption of the same, it is worthwhile to ask if the Euro has failed. The answer is yes. It has failed because, on the one hand, it was executed on a number of nations that had a diverse array of differences. Evidences of the failure of the Euro can be seen in the national debt crises by several countries like Greece and Spain, high unemployment rates in nations using the Euro, weak banks in the Eurozone, coupled with huge gap differences in most countries using the Euro (Feldstein, 2012). Comparing how the Euro is doing against major world currencies such as the Sterling Pound paints a grim picture of the Euro. The graph one below is evidence of the failure of the Euro and its weakness against one major currency, the Pound. Graph 1: The Sterling Pound versus the Euro (Shapland, 2014). The failure can be linked with the political aspirations of the Euro. Rather than consider the economic value and intricacies of the Euro, politicians across Europe though that the utilisation of the Euro would result in a deeper European connection across Europe and so would there be a change in the power around politics. Furthermore, Germain and Schwartz (2014) detailed that due to its political foundations, the failures of the Euro have been compounded due to the lack of a proper ideological basis along with no collective logic of purpose. Thus, it can be concluded that the Euro is indeed a political project that was destined to failure even though it has been said that there is no going back based on the argument that the single currency is not the key problem (Farmer, 2005). Up to this instant, the currency does not have the proper country to country institutional basis and it has failed to live up to the goals and aims of its founders for a major and fundamental international rule. References Cardone, G., 2011. The 10X Rule: The Only Difference Between Success and Failure. Hoboken: John Wiley & Sons. Commission of the European Communities, 1990. One Market, One Money: An evaluation of the potential benefits and costs of forming an economic and monetary union. [Online] Available at: http://ec.europa.eu/economy_finance/publications/publication7454_en.pdf [Accessed 12 April 2015]. Croucher, S., 2014. Roger Bootle: People Ignoring EU Treaty of Rome Reminiscent of Diplomats Who Ignored Adolf Hitlers Mein Kampf. [Online] Available at: http://www.ibtimes.co.uk/roger-bootle-people-ignoring-eu-treaty-rome-reminiscent-diplomats-who-ignored-adolf-hitlers-1438011 [Accessed 12 April 2015]. Farmer, D. J., 2005. 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