The design of Europe’s monetary union was flawed in that it works in a similar way to the interwar gold standard. With deflation the only viable option in response to crises, the burden of adjustment falls mainly on workers and debtors in deficit countries, while letting surplus countries off the hook. The euro crisis has thus not only led to a widening North-South gap within Europe, but also to an erosion of democratic legitimacy in the periphery. This has been manifested by the emergence of new antiestablishment parties and plummeting popular support for the EU in southern Europe. Voters have reacted to what they perceive as Brussels’ encroachment on their national sovereignty and seeming failure to comply with democratic principles.
Mediterranean Blues: The Crisis in Southern Europe
Issue Date January 2014
Page Numbers 101-115