The European Sovereign Debt Crisis And Its Impact On The Integration Of The European Union

As global economy gradually recover from financial crisis, the European Continent againshrouds in the shadow of sovereign debt crisis, which began in Greece, and grow worse overtime. The crisis arousing general concern has spread from periphery Europe to core countries,and inclined to gain the power to sweep the globe. The debt crisis in Europe is not only a bigevent of world economy, but also exerts great influence on international political stage andbecomes a major issue of this field. The thesis will discuss the process, causes,countermeasures and the impact on the EU integration around the debt crisis, trying to explainthe causes and influences from the perspective of international politics.The thesis consists of five parts:Part one will introduce the concept and definition of the debt crisis, explaining notionsinvolved in the problem. As defining concepts is the foundation of academic writing, suchconcepts like sovereign debt, sovereign debt crisis, credit rating are all included in this section.In addition, this part will differentiate sovereign debt and general debt.Part two focuses on description of process and status quo of sovereign debt crisis inEurope, looking back the course of the crisis broke out in2009and current situation till theend of2011. The crisis derived from Greece is actually a continuation of the internationalfinancial crisis caused by the US Subprime Crisis. Since its breakout in2009, the crisisconstantly spread to core states of EU. In order to solve the crisis, EU has offered help.However, their future is still uncertain so far.The third section probes into causes of the crisis, which is also the highlight of the thesis.This topic will be discussed in four parts: Firstly, the dilemma of euro zone and unreasonableindustrial structure are the main causes leading to debt crisis according to analysis ofeconomic factors. Secondly, from social factors analysis, the ageing population and exorbitantwelfare policy is the social elements for the crisis. Thirdly, the polity of European countriesand rivalry between EU and the US are political factors leading to the crisis. Fourthly,traditional values and moral orientation are cultural factors that caused the crisis. The fourth part attempts to provide solutions to the European sovereign debt crisis,mainly from two aspects below: The first step is internal reform in euro zone: reforming thedual mechanism of currency and finance; implementing financial alliance; establishingeffective internal rescue mechanism, the member countries should become more cooperativeand solve the crisis with joint effort; reinforcing the coordination and surveillance of theeconomic policies of the members nations. The second step is interior reform in debtornations. In order to maintain sustainable economic growth, the European countries shouldimprove economic structure as well as develop productivity; it is necessary to change socialwelfare modes such as endowment insurance, implement fiscal restraint plans, cutting thefiscal deficit step by step; Enhancing national cohesion is also significant to settle the problem,people should pull together to overcome the difficulties.The fifth section is an analysis of the influence the European sovereign debt crisisexerting on EU integration. In the first place, there is a probe into negative effect of theinfluence primarily from the following3aspects: Firstly, the crisis has affected determinationof the EU members on integration. Secondly, the crisis has hindered the process of theintegration. Thirdly, the crisis adds new variables to the integration. In the mean time, the debtcrisis has had positive impact on EU integration mainly from three perspectives. On the onehand, the European sovereign debt crisis has accelerated the perfection of economicintegration of EU. Owing to the severe crisis, the member nations of EU have realized thedrawbacks of single monetary union, thus the fiscal union begins to take shape, and therealization of economic integration of EU finally come true. On the other hand, the Europeansovereign debt crisis has facilitated the political integration of EU. The EU leaders have learntthat the crisis can be solved fundamentally under one condition: joint effort of all thecountries involved,“speaking with one voice”. Last but not least, the European sovereign debtcrisis has brought opportunity for real implementation of legal integration of EU. EUconstitutionalism and courts get the chance to play a role in front of serious crisis.