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EUROZONE: A continent in crisis

January 01, 2013

THE Eurozone sovereign debt crisis is no longer just about the future of Europe’s single currency or about Greece, Italy, Spain and Portugal, the countries hardest hit by Eurozone economic and monetary woes. What started as an economic and monetary storm has morphed into a powerful cyclone which is causing deep political and social unease across the 27-nation bloc.

Having managed to put in place an array of new measures such as the recent decision to establish a single European banking regulator, economists seem confident that the worst of the Eurozone crisis may be over. But that does not mean that the Eurozone economies will be thriving any time soon. Growth rates will remain “very low” in 2013, German Chancellor Angela Merkel said recently, adding: “We have tough times ahead that can’t be solved in one big step.”

Much has changed in Europe in the last 12 months. Germany is in the driving seat and while many in Greece and Italy balk at the extent of her power, Merkel is widely recognised – and admired – as the EU’s most powerful leader.

Mario Draghi, the head of the increasingly active European Central Bank, is also feted as a key player – as is Mario Monti, the technocrat-turned-prime minister of Italy.

In some ways, the crisis has shaken the very foundations of the EU. Initial concerns that Greece would have to leave the Eurozone have been replaced by an even stronger worry about an inevitable British exit from the EU.

Meanwhile, following in the footsteps of Scotland, Spain’s most prosperous province, Catalonia, is clamouring for independence. To counter the risk of such unravelling, many in Europe are calling for stronger progress in creating a European political union. But this does not resonate with millions of Europeans – especially young people – who cannot find jobs.

For many, the most worrying development is the emergence of extremist parties across Europe, with arguably the ‘Golden Dawn’ party in Greece causing the most concern. If Europe is to survive and thrive in the 21st Century, it will have to deal with the social and political crisis; not just the economic one.

The writer is Dawn’s correspondent in Brussels.