When the European Union was formed more than 50 years ago, there was much hope and optimism that this trading bloc would become a dominant global force.
The euro marched forward as an alternative currency for trade challenging the US dollar as the global trading standard. Everything seemed to be progressing as planned until a bit of bad news spoiled the party. Turns out that some member countries are having second thoughts about honoring their responsibilities to each other and are now putting their own country's agenda first. Meanwhile, as the debate continues on how to resolve the Greek debt problem, credibility is crumbling.
Measured self-interest is not a bad thing as every country has a right to make fiscal judgments that it believes are in the best interests of its citizens. But it's also important for member nations to remember the pledge they made when they decided to become part of the European Community. The chant then was "all for one and one for all". But it looks like that pledge only applies in good times and is instead subject to debate when tough times roll in. A union should be just that; a union. And the self-interest that is percolating throughout Europe is a grave threat to the solidarity of the euro zone.
Greece is not the only risk at Europe’s doorstep.
The Greek economy, while troubled, will in all likelihood be rescued by a combination of funding from the IMF and member nations. The real concern lies in the potential problems from Portugal, Italy, and Spain. Will we see a commitment by the stronger member nations to rescue these economies as they falter? With Standard & Poor's already downgrading the sovereign debt of Portugal and Spain, policymakers in Europe must already be thinking what to do if problems spiral out of control in these countries as well. Will they stand with member nations or leave these nations to burn like Rome in 64 AD?
Will they act as a union in 2010?
George Soros has said he believes that there is a real possibility that the euro will cease to exist based on the current discord among member nations. Jim Rogers and Marc Faber have said the same thing and they are being joined by a chorus of strategists who only see gloom for the future of the EU. I don't think the outcome need be that dire. But that outcome is all but assured if member nations forget their original pledge to stand together.