The European Debt Crisis

Abstract

A cloud of uncertainty has enveloped the fate of the euro. After three decades in the construction of European Monetary Union, culminating in the birth of the euro in 1999, the whole edifice has been shaken to its very foundations by the recent sovereign debt crises, which have engulfed the peripheral, deficit countries of the eurozone (i.e., Greece, Portugal, Spain and Ireland). These profound asymmetrical shocks, emanating from the global financial crisis of 2007–09, could eventually threaten the internal cohesion of the eurozone. The aim of this chapter is to critically evaluate the efficacy of the neoliberal strategy, which has informed the Maastricht Treaty and how the evolution of the euro project now encounters the limitations and the deleterious legacy of this ill-conceived institutional framework.