The Break-Up of the Eurozone?

The centrifugal dynamics set in train by the neoliberal strategy of “negative integration” have set the stage for the disintegration of the eurozone in its current incarnation.1 Still in its early phases, this process of dissolution could threaten the very foundations of the post-war European project and could generate unpredictable political and social turmoil as popular sentiment clamours for the restoration of the primacy of national sovereignty. Despite the massive bailouts imposed on the peripheral, deficit countries, a dangerous feedback loop has emerged in which the banking crisis has morphed into successive sovereign debt crises. The subsequent austerity measures have merely pushed the eurozone into a vicious circle of falling government revenue caused by the recession, which in turn, has only further increased their respective debt burden (Backburn, 2011, p.39). But the onset of a fiscal crisis has provoked a downgrading of the creditworthiness of the debtor states and triggered further speculative attacks in the bond markets as government bond yields increased sharply.