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By Mike Caggeso
Ireland is deep trouble.
So are Romania, Greece and Hungary.
But even with the strongest nations in the Eurozone severely weakened, European Monetary Affairs Commissioner Joaquin Almunia asserts that there would be no need for a country on the brink of collapse to seek help elsewhere.
"If a crisis emerges in one euro area country, there is a solution … Before visiting the International Monetary Fund, you can be sure there is a solution and you can be sure that it is not clever to talk in public about this solution," Almunia said to a meeting of European Union leaders Tuesday, Reuters reported. "But this solution exists. Don't fear for this moment – we are equipped intellectually, politically and economically to face this crisis scenario, but by definition these kinds of things should not be explained in public."
However, European Union laws make no mention of bailouts for Eurozone countries, and Almunia didn't elaborate any further on the "solution" he referred to.
With budget deficits, currencies and bond spreads spinning out of control, several countries are nearing a collapse – something that has raised the specter of a Eurozone breakup.
The stronger economies are generally opposed to weakening their currencies to bailout weaker countries, saying that doing would simply drag everyone else down.
Meanwhile those near their deathbed say the playing field hasn't been level to begin with, especially Eastern European economies recovering from the former Soviet Union's collapse and whose bank sectors are dominated by sinking Western banks.
On top of their exports drying, new EU members have watched their currencies sink against the euro, making their debts to European banks harder to pay off, the New York Times reported.
Such is the reason why those countries would seek financial help outside of their European partners, as more money owed to them worsens their situation.
"The European Union will now have to prove whether it is just a fair-weather union or has a real joint political destiny," Stefan Kornelius, the foreign editor of the German newspaper Süddeutsche Zeitung, told The Times. "We always said you can't really have a currency union without a political union, and we don't have one. There is no joint fiscal policy, no joint tax policy, no joint policy on which industries to subsidize or not. And none of the leaders is strong enough to pull the others out of the mud."
Still, Almunia was quick to dampen any concerns that the union will dissolve.
"The probability of this happening is zero. Who is crazy enough to leave the euro area? Nobody. How many candidates to join the euro area do I know? A number that is bigger than last year," he said.
News and Related Story Links:
- New York Times:
Growing Economic Crisis Threatens the Idea of One Europe