One of the ‘selling points’ of a currency union in Europe was the idea of free movement between Eurozone countries. This has allowed those living in the currency bloc to move between countries in order to find the work that best suits their skills, enjoy cross limited cross-border trade restrictions and experience greater ease when holidaying and visiting friends and family abroad. Without having to attain visas or exchange currency, Eurozone citizens have been given licence to move freely without bureaucracy making life difficult.
2008 Financial Crisis Reveals Holes in 19-Nation Currency Bloc
For a number of years the ‘Euro Experiment’ was a resounding success with free movement one of the most attractive features of a currency union. Citizens of smaller economies could branch out in order to find better-paid work, the single currency was a strong asset which allowed for greater trade and once war-torn countries were gunning for ‘an ever closer union’. However, the financial crisis in 2008 started to unveil holes in the currency bloc with smaller economies feeling the pinch having overspent and racked up significant debt when the Euro was most successful.
Growing divergence between Eurozone members reached a peak in 2015 when crippling Greek debt caused the Hellenic nation to revolt against austerity measures demanded by Eurogroup finance ministers and creditors. Whilst Greece made it clear it was keen to keep the Euro, the harsh austerity measures had been fundamentally rejected by voters. However, with the weight of the Eurozone pressing down on the embattled Hellenic nation, the new Greek government (which was voted in on the strength of its anti-austerity stance) actually secured a deal which made the situation worse. The situation in Greece also caused a massive divide in Europe which highlighted concerns that 19 diverse cultures cannot work together under a single currency. Furthermore, only last week the centre-right Portuguese government was ousted by a coalition of socialists campaigning against proposed austerity measures. This has renewed fears in traders that a period of geopolitical uncertainty could lead to the eventual end of the common currency.
Will the Isis Threat be the End of Free Movement?
With the emergence of ISIS as a global terrorist threat, many Syrians (and those from surrounding areas) have been forced to abandon their homes. This has caused a massive immigration crisis with refugees fleeing to Europe. Such is the extent of the crisis that many European countries, including the Eurozone powerhouse Germany, have closed borders in an attempt to limit refugee access. This directly questions the viability of the Eurozone and ‘free movement’ with the idea that Eurozone countries can pick and choose when to leave their borders open contradicting the mantra of an ‘ever closer Europe’.
Recently, the devastating attacks by ISIS on France have caused many countries to enter a state of lock down. This vicious act of terrorism could have a long-term impact on free movement within the Eurozone. At present it is much more difficult for Europeans to visit neighbouring countries with the terrorist threat on high alert. France has responded to the attacks by air striking Syria, bolstering fears that a full on war is on the offing. What’s more, yet more bombing in Syria could exacerbate the refugee crisis.
Even if the threat of terrorism and the refugee crisis abate, something which will certainly not happen overnight, the currency bloc has been shown to be fundamentally flawed. With smaller European countries questioning imposed austerity measures, many fear that we are not far from seeing the first country either voluntarily exit or be forced to exit the Eurozone. This could spark a chain reaction leading to the downfall of the 19-nation currency bloc and, of course, free movement.