Once revered as a progressive supranational success story, the European Union now faces excessive public debt, unemployment, and stagnation partly due to its flawed institutional design. This has become apparent in southern Eurozone countries like Portugal and Greece, which continue to suffer from strict austerity measures imposed by the International Monetary Fund, European Commission, and European Central Bank (Troika). This report examines the politics behind the European Sovereign Debt Crisis, including the rise of Eurosceptic populist parties. Furthermore, it analyzes austerity in southern Europe, the ‘moral hazard’ argument, and the German government’s reluctance to lead Europe out the crisis. This report cautions against such a reluctance, which will allow populist parties to gain a stronger foothold in Europe’s political institutions and disrupt the European project. Due to the shift of the Eurozone’s financial crisis to a political one, it is in the best interest of the European Union and its leaders to continue to integrate its financial, banking, and political institutions in order to face the unique and dynamic political restraints in solving the Euro crisis.

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© 2014 C. Cole Fairbanks

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This work is licensed under a Creative Commons Attribution 4.0 License.


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