Greece is ground zero for the two greatest challenges to afflict Europe in recent years: the debt crisis and Germany's insistence on austerity as the only cure, and the backlash against the wave of human migration from war-torn and impoverished countries. The migrant crisis is already a humanitarian disaster, and the situation is getting worse.
The European Union, however, is all but paralyzed. The Paris terrorist attacks in November resulted in the reimposition of border controls through most of the previously open "Schengen" area. The attacks also convinced many Europeans that migrating Muslims are a security threat.
An initial welcome turned into fear. One of the key leaders in Europe, Angelina Merkel of Germany, finds herself under intense political pressure because of an anti-immigrant backlash from voters. Desperate for any solution, the EU is seriously entertaining a deal to accept Turkey as a member in exchange for Turkey's holding most of the migrants within its borders.
Giving Turkey a path to EU membership is problematic to Cyprus, which is a tiny island but an equally powerful EU member state, with technically the same vote and potential veto that Germany and France have.
Cyprus can veto the refugee deal that the rest of Europe so desperately needs to make with Turkey. Cyprus has an EU-backed veto on starting accession negotiations over numerous new policy areas, because Turkey doesn't recognize its passports or allow ships and airplanes from Cyprus into its ports and airports.
Cyprus has legitimate concerns here, but the EU solution is to simply ignore those concerns and plow ahead on other fronts.
That approach will probably work too, but each such episode pulls a few more bricks out of the EU superstructure. Bullying your smaller members is not consistent with the idea of an "ever-closer" union. And of course, another looming danger is that the United Kingdom will hold a referendum this summer that may well lead it out of the EU. A member leaving the EU would set a dangerous precedent.
For years following, there would be major consequences for world trade and currency flows. Let us not underestimate the gravity of the crisis we are going through, and its potential outcomes. However, we should also consider the possibility that in the midst of crisis political leaders may respond by radically revising their hitherto entrenched positions. It remains plausible that out of this historic crisis a more sober and realistic political ethos in the region may yet emerge, one that could eventually lead to a renaissance towards a more sustainable Europe in the years ahead.
The scale of the crisis, viewed through the prism of history, could yet generate opportunities to lead Europe forwards in a fundamentally different way. For you. World globe An icon of the world globe, indicating different international options. Get the Insider App. Click here to learn more. A leading-edge research firm focused on digital transformation. Good Subscriber Account active since Shortcuts.
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Email address. Skip Navigation. Key Points. The euro zone, in which 19 countries share the same currency, has struggled to grow since the sovereign debt crisis of VIDEO Squawk Box Europe.
Tweet 1 "If not now, then when? EU working on weapons to deal with coronavirus crisis, Eurogroup president says. That would mean exports from the core states would become more expensive than those form competing states like the United States and Japan, something that could slow the core countries' growth.
Back To The Credit Crunch Across Europe and the much larger financial world, the shock waves of any breakup of the eurozone would be almost certain to bring a new global recession. Banks, brokers, and exchanges are already in the front line of the euro crisis and would take huge losses as governments that owe them money default or make payments with devalued currencies.
Even banks that never loaned directly to those governments would be vulnerable, as the cost for buying insurance for loans would soar generally. All banks would have less money to lend, likely creating another worldwide credit crunch and slowing economies everywhere. They are not exposed to the periphery," says Boone of the London School of Economics. It's a scenario that gives no joy to anyone.
And it also is one that could change the face of Europe forever. Since the end of World War II, Europeans have become used to the idea of an increasingly united Europe -- one where countries that so frequently warred in the past are bound by economic ties that make new conflicts between them virtually unthinkable. But how much that ideal could survive the crash of the euro is open to question.
Many experts worry that a collapse of the eurozone could also bring the collapse of the European Union itself. Tsakloglou fears that protectionist feelings would grow to such heights with the collapse of the euro that it's hard to imagine any of the revenue sharing that currently underpins the EU could continue.
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