Eurozone Crisis and Germany

Banerjee, Jyotirmoy
October 2012
IUP Journal of International Relations;Oct2012, Vol. 6 Issue 4, p42
Academic Journal
The European sovereign debt crisis is a financial crisis that makes it impossible for some European states to pay their government debt without outside aid. Europe's debt problem is worse than any other region because Europe has the largest banking system in the world. Italy and Spain, Portugal, Ireland and Greece are facing the crisis despite rescue packages and ancillary measures. Germany is the economic leader of the 17-nation eurozone. Since any help to the stricken states will ultimately devolve largely upon prosperous Berlin, Chancellor Merkel has firmly opposed further help. She insists on 'austerity' by the affected states, especially worst-case Greece, rather than 'bailout' with external help. This has resulted in a polarized euro-opinion divided between the 'austerity' school and the more populist 'growth'/bailout school. Germany's action will be key to the eurozone's and the euro's survival.


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