EUROZONE CRISIS: WHAT IS BEHIND THE SCENE?

The eurozone crisis continues to be in the spotlight of world business, and not only. Everything turned out very dramatic and sudden. In fact, quite recently, economists promised that, if not today then tomorrow, the single European currency - the euro - will really compete with the dollar and take its place in the international payment system. And even the "trouble" in Greece, where the government was too generous with the social benefits without considering the budget deficit, seemed quite solvable.

But now it turns out that there are problems not only in Greece. In mid-January, the international rating agency Standard & Poor's downgraded the sovereign credit ratings of nine of the 17 eurozone countries, including its leaders Germany and France. Then, the agency downgraded the credit rating of the European Financial Stability Fund (EFFS) from the highest AAA to AA+.

A real prospect of default is looming over Spain, where unemployment is breaking all imaginable records.

Meanwhile, the EU's response to the "rating trouble" was quite unexpected, and resembled the actions of a dictatorial regime which is confident that censorship and a ban on unfavourable information is a solution to all problems. The lawmakers of the democratic, open and transparent European Union made a proposal to enact a law under which international rating agencies will be prohibited from publishing information about the sovereign rating of a country without its consent, according to Reuters. However, it is not clear how the ban will work in practice, because the proposed law will only be valid in the EU.

It is already clear that this bill will be reasonably opposed by economists who make decisions to sell or purchase debts, focusing on the credit ratings of countries. But politicians claim that the publication of ratings of countries and banks by agencies nullifies all their efforts to resolve the crisis. And certainly, no one thinks of the popular proverb - "do not blame the rating, if your economy..."

Experts, however, are sure that in reality, the EU is experiencing not an economic but a political crisis. In particular, this is the view of Guy Verhofstadt, the former prime minister of Belgium, the head of the third largest faction of the European Parliament - the Alliance of Liberals and Democrats for Europe.

"Europe is experiencing a political rather than an economic crisis," Le Soir newspaper quoted him as saying. According to the politician, "it is impossible to have a common currency if it cannot be guaranteed by the federal government".

"We need a federal vision (at the EU level), as was the case under Kohl (Helmut Kohl, the former chancellor of Germany) and Mitterrand (Francois Mitterrand, the former president of France). But Angela Merkel (German Chancellor) and Nicolas Sarkozy (French President) are thinking only of their elections and public opinion," RIA Novosti quoted Verhofstadt as saying.

He is convinced that "it is impossible to continue with a Europe that operates at the national level". "We need to turn into a federal Europe. G8 will not include a single European country in 2030-2035. The only way to be part of it is to have influence there, and it will be at the EU level (as an organization)," the MP said.

Strictly speaking, the need for tighter "fiscal discipline" in the European Union has been spoken about since the very outset of the crisis. In late January, under pressure from Germany, it was decided to sign an agreement on financial stability, which was designed, according to the official version, to insure the EU against the catastrophic consequences of the budget "tricks" of individual countries. In reality, it provided for the introduction of supranational institutions of financial regulation.

The agreement will come into force in 2013. It should be noted that the requirements of the new budget agreement will apply to the European countries that join it only after the national parliaments ratify it.

The draft agreement on fiscal stability was developed at the EU summit on 9 December 2011. The agreement provides for sanctions against countries where the budget deficit exceeds 3 per cent and sets the primary deficit at 0.5 per cent.

This fiscal pact is meant to help stabilize the situation in the European region and restore the confidence of investors.

At the meeting in Brussels, European leaders managed to reach consensus on the contentious issue of holding regular summits of the EU. At the same time, the United Kingdom refused to sign the new agreement on financial stability. It was opposed by the Czech Republic, too. Prague refused to adopt the document because of internal divisions in parliament on the ratification of the agreement. Britain refused to sign the document in December last year. Prime Minister David Cameron said that closer economic integration with other countries was rejected in order to protect Britain's financial sector and industry.

Earlier, Poland and a number of other Eastern European countries warned that they will vote against the new fiscal agreement if countries outside the eurozone are not allowed to participate in regular meetings of EU leaders. In the end, it was decided to hold two mandatory annual meetings of the leaders of the eurozone and one summit open to all EU member states.

To be honest, Eastern European countries often feel neglected during discussions on European issues. The psychological division into "old" and "new" Europe leaves no doubt that the EU  obviously was not ready for the fact that the accession of Poland, Romania, Bulgaria and the Czech Republic to the European Union will lead to a serious shift in the "balance of power". The discussion of the euro crisis reminded everyone of the old problem once again.

However, many warn today that very important aspects of the problem remained "behind the scenes". The issue is not so much about the fate of the euro as the survival of the current model of European integration as such, because the EU, apparently, was not ready for the degree of integration, which it had defined for itself.

However, if we speak openly to the very end, the very idea of "partial integration" and the attempt to invent something between national states and one country instead of the European "quilt" was not viable. But now, as it turns out that the "semi-national" institutions created in the EU simply do not work. Moreover, there is still no mechanism for solving European problems. Denmark, unable to cope with the influx of illegal immigrants, has already introduced controls on the borders in spite of the Schengen agreements, while Italy did not get aid from its EU partners during the immigration crisis on the island of Lampedusa ... But the saddest thing is that no one remembers that the referendum on the common EU constitution failed a few years ago, because residents of many European states refused to dissolve their nation in this "common European sauce". And the most seasoned experts advise us to remember the same intestinal "cucumber crisis", the story of the intestinal infection of unknown origin when it became clear that pan-European medicine cannot quickly find out where the source of infection was and how to fight it, while bureaucracy failed to respond to this microscopic "challenge". And as some watched a Spanish delegate shake a cucumber at a European meeting, others noted that Europe was not ready to solve pan-European problems. In such circumstances, it is impossible to expect "federalization", the deepening of integration and the proclamation of the "United States of Europe". But without this, the euro crisis is unlikely to be resolved.

And it may well be that the European stock exchanges, where test transactions were conducted in the abolished currencies of EU countries, simply demonstrated remarkable foresight.