ECOSOC (Economic and Social Council)
Euro Debt Crisis
The European Union’s attempt to solve the global financial crisis has resulted in turmoil of sovereign debt in Europe. There are many concerns about rising government deficits and debt levels in countries such as Greece, Ireland, Italy, Spain and Portugal. This Euro Crisis created an alarm in financial markets as countries such as Greece that are at default. The Russian Federation is very concerned with Europe’s position globally and in the stock market. As any other member of the BRIC, Russia can provide Europe with loans. However, Russia urges major European countries to help nations severely hit by the Euro Debt crisis. Europe is capable of handling the crisis if it shows enough commitment.
During the past decade, Europe underwent several debts, which permanently marked them to present day. The numerous reasons why Europe got implicated into crisis started since the Euro was put into circulation in 1999. With a common currency, the euro was predicted to ensure stability price, and eliminate the need to exchange currencies, saving an estimate of $30 billions a year from the transaction costs. One of the major benefits of Euro is how it has eliminated speculation through EU countries and the prevented competitive devaluation to keep inflation rates low. With such opportunities counties such as Greece could’ve borrowed money with interest rates a low as Germany. However, things began to change. Greek borrowed heavily in international capital markets to fund government budgets ; they have spent more than they earned. Greece’s budget deficit was an average of 5% per year (2001-2008) compared to the Eurozone average of 2%. In 2009, Grece’s budget deficit was estimated to have been more than 13% GDP which attributes to high government spending.Today, has a debt of 116%. With the euro as a currency, inflation could not happen....