Stephen Tindale: EU in Danger of Disintegrating

Friday, 13 Apr 2012 07:32 AM

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The European Union could disintegrate if member nations don't solve the debt crisis soon, says Stephen Tindale, Associate Fellow at the Centre for European Reform in London.

Bailouts and dependency on multilateral lending institutions such as the International Monetary Fund associated with countries like Greece are straining relations with healthier countries in the currency zone, and politicians are increasingly acting in national interests as opposed to that of the bloc.

"Clearly I am very worried because the movement towards European cooperation or integration seems to have stalled at the moment and the aftermath of the euro crisis is going to make the movement towards disintegration more powerful," Tindale tells CNBC.com.

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"There's a clear need for some imaginative and inspiring European political leadership and there's no obvious figure willing or able to play that role."

French President Nicolas Sarkozy has called for more trade protectionism in Europe and tighter border controls, while criticism against Greece among German politicians has become common.

Spanish Prime Minister Mariano Rajoy has warned other E.U. leaders to be careful when talking about his country, pointing out "what is good for Spain is good for the euro zone," CNBC adds.

"The fact that there is no European political forum is, I think, a significant factor in the absence of an European identity," Tindale says.

"I think that moving towards electing the European Commission is a sensible route to go. That would require changing the Treaty and referendums in some countries."

The European Commission, the executive arm of the European Union, isn't an elected body.

The European debt crisis has calmed in recent weeks since the European Commission, the European Central Bank and the International Monetary Fund bailed out Greece via a $172 billion rescue package.

Such stopgap measures don't solve underlying economic problems such as too little growth and too much debt, and concerns are arising that investors are now worried the debt crisis is spreading to the larger Italy and Spanish economies.

Yields have been spiking in Spanish government debt auctions, meaning investors are demanding more for their money to invest in the country, and, European Central Bank Executive Board member Benoit Coeure has suggested the organization could buy Spanish debt to lower borrowing costs and ease concerns.

Markets, however, remain on edge.

"The relief (that the ECB might act) could be felt more globally, but it was limited in scope indicating that we remain in a roller coaster and are not at the end of it yet," says Sebastian Galy, an analyst with Societe Generale, according to the Associated Press.

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