MEP Alfred Sant said that the two biggest challenges that the Eurozone must face up to if it is to survive are Greece and economic stagnation. He said that effective solutions to both these challenges are still pending.

If they boil over, said Alfred Sant, both or one of them could paralyse the proper functioning of the eurozone project.

The Maltese Head of the Delegation of the S&D at the European Parliament was answering questions by Prof. Joseph Falzon on ‘The Euro Crisis and the Future of the Euro Zone’ during a seminar organised by the Department of Banking and Finance of the University of Malta in Valletta.

Dr. Sant said that over the past five years, the eurozone has built up strong protective structures to guard it against the financial threat of collapse if one or two members just go bankrupt and have to leave the eurozone.

“However, a longstanding crisis with Greece would erode the stability of the zone and would politically increase the likelihood of similar situations developing in other countries, mainly in the south of Europe where the social impact of bailout programmes has been very hard.”

“The other challenge is that the eurozone seems unable to compete successfully in a globalised world. It has been mired in economic stagnation and unemployment. There seems to be no real strategy for getting things moving again. The political right claims fiscal consolidation will do the trick, but it has not.”

Sant added, “the left claims governments should spend and invest more but there is not enough political support for this. So too frequently, the result has been that remedies are carried out in too little, too late mode which leave things almost like they were.”

Answering a direct question whether the eurozone can survive, Dr. Sant replied, “the answer remains like it always has been. Too much political capital has been expended, on left and right, in too many countries for the leaders of eurozone countries not to go on keeping it going as best as they can.”

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