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9d3cef0146f86f4010c44373_pa2395c.jpg Paul Lachine

Can Europe Be Saved?

As 2012 begins, a crisis that originated in Greece has ended up raising doubts about the very viability of the euro, even of the EU itself. Difficult choices regarding the Union's governance and economy must be made, and Europe is running out of time.

VIENNA – In 2011, Europe’s financial and banking crisis escalated into a sovereign-debt crisis. A problem that began in Greece ended up raising doubts about the very viability of the euro – and even of the European Union itself. A year later, those fundamental doubts remain undiminished.

But, if one compares the EU with the United States or Japan (where public debt equals 200% of GDP), the Union’s current poor image is unjustified. Indeed, employment in the EU as a whole remains high, as do private savings rates. Moreover, the Union’s trade is in balance with the rest of the world.

One reason for doubt about the euro and the EU is that, since the spring of 2010, Europe’s leaders have rushed from one crisis summit to the next, each time devising supposed solutions that provided too little and arrived too late. Europe’s leaders have never fully deployed their economic and political firepower. On the contrary, rather than taming the financial markets, as they once intended, Europe’s leaders continue to be besieged by them.

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