Spiegel: Fixing the Euro

The European Union has a lingering problem with some members taking on excessive debt. In turn, economic woes fuel resentment against more disciplined members, suggesting that some loans could go unpaid. “The danger emanating from the current, out-of-control situation doesn't just come from the possible return of the euro crisis and its far-reaching consequences for growth and prosperity,” explains Henrik Enderlein for Spiegel Online. “ It also comes from the new, toxic atmosphere of distrust among European peoples and nations.” Italy – among the world’s 10 largest economies – carries the largest debt load of EU members, with lagging growth and high unemployment rates. Stronger countries like Germany cannot isolate themselves from Italy’s problems, warns Enderlein. EU leaders are at a loss for solutions: Italy’s leaving the EU, negotiating a debt haircut or accepting a bailout would generate new problems. Europe must develop a plan for reforms that produce both benefits and discipline for Italians, and Enderlein notes that “A fundamental principle of the eurozone is that every member state must service its own sovereign debt.” The EU could do more to promote structural reforms and growth while reducing speculation that profits from a member’s losses. – YaleGlobal