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7THE EURO, AS THE LINCHPIN OF THE EUROPEAN UNION
1 2 Saparboyeva L.S. , Ruzimboyev S.S.
1Saparboeva Lola Sarvarbekovna - Student;
2Ruzimboyev Sarvar Safarboyevich - Associate Professor, FOREIGN PHILOLOGY FACULTY, URGENCH STATE UNIVERSITY, URGENCH, REPUBLIC OF UZBEKISTAN
Abstract: the euro might be said to be a unique milestone excellently embodying the further integration and the empowerment of more united Europe. However, not everyone can be in accord with this connotation, given the presence of some ranting against the very idea or the particular aspects of the European Monetary Union. In this regard, the euro frequently constitutes per se so called bête noire for most eminent scholars. One of them may be Wolfgang Streeck, a German economic sociologist, whose work 'Buying Time: The Delayed Crisis of Democratic Capitalism ' propounds an alteration of the relations between democracy and capitalism. The author offers insights into the shortcomings and self-contradictory features of the modern-day democratic capitalism from a European perspective with its analytical approach. In essence, Streeck contemplates that the role of the state is pivotal, when it comes to handle financial and economic crisis. However, as pointed out by the author, at present the governments of all developed capitalist countries have been proceeding not to prevent, but to delay a subsequent economic collapse by virtue of several implemented policies (such as inflation, rise in state and private debt) at their disposal, which are on their part just allowing them to buy time prior to a large economic disaster.
As a corollary of above measures, in accordance of Streeck's standpoint, the state is placing more priority on the interests of so called 'Marktvolk ' (the people of the market), yet at the cost of hurting those, who are the part of the 'Staatsvolk' (general citizenry). What is represented as the principle message in this regard is that the existing stance of affairs when capitalism is availed to the detriment of the Staatsvolk, is also attributable to the downward trend in democratic organization and participation, which can be illustrated by the waning unionization and voter turnout rates in the EU as well. In truth, this paper applies a specific statement of Streeck from this book as the benchmark to embark on further investigation on this account.
The argument, the author puts forward, is that economic liberalization highly envisaged from the EU Monetary Integration has actually entailed none less than the expansion of markets along with the restriction of democratic rights, given that the presence of the common currency, the euro diminishes the national and especially monetary sovereignty of national governments and constrains them to resort to reforms, some of which are wage as well as service cuts, irrespective of the unwillingness of their citizens. Streeck, hence, deems that should the euro be abandoned and if countries returned to their old currencies currencies, it would allow them to enjoy better monetary policy, that would be more compatible with their needs and interests, particularly in the time of economic crises.
The launch of the euro as the common currency of the European Monetary Union (EMU) is a remarkable event in contemporary history. The birth of the currency is dated 1999. Eleven Western European countries first adopted the currency which led to the fully replacing of the previous national currencies such as the French franc and the Italian lira in mind-2002 (Hosli, 2005). Politics played notable role in the conception and implementation of the new currency due to fact that the euro was seen as an element capable to lead to further European integration. Therefore, Economics was a secondary parameter in the process despite the macroeconomic importance of a national currency (Nordvig, 2014). The origin of European monetary integration is observed in 1957 Treaty of Rome, which established the European Economic Community. However, the conception of a common currency was not part of the common agenda until 1960s (Tsoukalis, 1977). This may be due to the obligation of nations to fix exchange rates versus the US dollar appreciating the Bretton Woods regime as well as the establishment of the customs union and Common Agricultural Policy (CAP) in late 1960s. Therefore, preparing the EC to upcoming challenges became notable with the unilateral devaluation of the French franc and the unilateral float of the German mark in 1969 (Sadeh, 2006).
The creation of the single currency may be seemed as a unique phenomenon in human history since there is no precedents of creating a brand-new currency by a group of nation states. Moreover, the uniqueness of the euro was believed to extend the level of cooperation among nations within the common currency area due to the expected spillover effected. Thus, nations cooperation would have a boarder range of economic and political decision (Mody, 2018). Nevertheless, the political enthusiasm regarding the euro may have underestimated the macroeconomic relevance of national currencies and the necessity and the theorical consideration on single currencies. For instance, level of competitiveness of countries within the same monetary area since Uncompetitive countries will eventually experience an economic crisis (Nordvig, 2014). In addition, the eurozone fails to sufficiently meet elementary criteria for common currencies such as openness and size of
economies, price and wage flexibility, and level of fiscal integration (Baimbridge & Whyman 2015). Currently, the euro is legal tender in nineteen-member states of the European Union. In addition, the currency is used in Andorra, Monaco, San Marino and Vatican City on the basis of a formal arrangement with the European Community; and within Montenegro and Kosovo without a formal arrangement (ECB, 2018). The establishment of the euro is a consequence of historical events in Europe.
Although the idea of the launch of a common currency was introduced into the agenda in 1960s, the Euro was only fully implemented in 2002. Politics has played a remarkable role in history of the euro. Being economics a secondary aspect in the implementation and upheld of the currency. Having analyzed the historical background of the euro, the following chapters aim to weight the benefits and the costs of the euro for the European Union, being the benefits the first objected of study.
In conclusion, the establishment of the common currency of the European Union has proved to be a consequence of historical events remarkably influenced by politics due to the idealization and later launched the single currency as believed to embody a core element for European integration. The occurrence of such events is dated to 1960s, followed by the launched of the currency in 1999. Yet the growth of the so-called eurozone is an expected phenomenon due to the legal requirement of the Union to the adoption of the euro as the official currency.
References
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