Planning to Fail: The Eurozone, its Sovereign Debt Crisis, and the Future of the Union

The European Union has been one of the greatest accomplishments of modern history. Through economic and political integration has ended centuries of warfare on the continent while producing the worlds largest trading bloc. Despite the initial success of the monetary union and its single currency, the Union has been bogged down economic troubles in the form of a debt crisis among several of the member states. The recovery period of the crisis has produced growth that is slow and uneven. Countries such as Germany has assumed the role of the economic powerhouse of Europe and therefore a political leader in the Union, all while Greece faced dangerously high debt and unemployment. In this paper I aimed to examine why the European Union has been subject to asymmetric shocks in its monetary union and why growth has been difficult to achieve. I argue that this is due to design flaws of the EU and EMU to form the institutional and political capacity to ensure proper convergence of the member states. By basing the assessment on the theory of Optimum Currency Areas by Robert Mundell as well as monetary and fiscal theory, I have found the design of the monetary union and single currency to be rushed and formed more by political ideology rather than economic theory. Consequently, attempts at the recovery of the Greek recovery have also been subject to the same policies based on ideology as the creation of the euro