The U.S. government and International Monetary Fund (IMF) have warned Eurozone leaders that the debt crisis Greece, if not thoroughly solved, can set off a "domino effect" in European countries that could threaten the stability of the world economy.
Initially, European leaders "abandoned" Greece, letting the country solve her own problems for fear that helping Greece could set a precedent for countries with high public debt in Europe. The EU's sluggishness has led to a bond price freefall and the tripling of bond debt. As Greece's debt threatened the status of the Euro and brought with it a chain disruption in countries with huge debt levels, the EU was forced to act.
The result is that a loan package worth 140 billion dollars, 4 times higher than the originally estimated loan of 40 billion dollars, was launched in May after a long delay because of disagreements among members of the alliance.
To avoid the mistakes Greece made, some EU countries like Spain, Portugal, Italy, Hungary, France and the latest Romania, have announced unprecedented measures to tighten their belts. Even Germany, "the flagship of the European economy," has also decided to implement measures to cut about 90 billion of its budget, with the aim of keeping budget deficits at 3% of GDP over the next three years, according EU rules against deficits.
However, the wave of tightened spending has faced strong opposition from trade unions across the EU. Demonstrations and strikes have continued to break out in these countries.
The crisis clearly showed the powerlessness of the euro currency area in controlling governments, and not letting them sink into debt and budget deficits.
French Finance Minister Lagarde Chrsitine had to admit: "The indecisiveness of the EU leaders has led this bloc fall into the panic today. If the EU soon embarks on solving the first problem, it will soon stop the bad debt crisis from spreading like it is now. "
The irresolution of Europe also shows that the EU is not really united and that such a prospect is unlikely to come true. It is because these countries have different histories, different cultural and ethnic interests of their own. The unity is only relative, so when every decision affects the interests of each country, it is difficult to achieve consensus within the bloc.
The people of Germany and France taking to the streets against the Greek aid is proof that divisions within the bloc have begun to appear.