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EUROPEAN UNION CRISIS



EUROPEAN UNION CRISIS

CHAPTER I
Introduction

A.    Background
Although European Union member states are working hard to cope with economic crisis in this area, various rating agencies reports show a very critical Europe economic condition particularly in the Euro Zone. Rating agencies Standard and Poor’s (S&P), Moody’s and Fitch report the falling down of Euro Zone member states’ credit ratings. These agencies also warn about powerful states namely France and Germany. And recently the agencies decreased rating of several banks in Europe.
Speaking of European Union crisis does surely regard to the case of Greek’s economic failure by which spread to other European Union states, e.g Portugal, Italy, Ireland, Greek, and Spain. As predicted as the trigger of European crisis, Greek is a state with highest debt ratio which is 142.8% of governmental debt followed by Italy (119.0%), Belgium (96.8%), Ireland (96.2%), Portugal (93%), Germany (83.2%), France (81.7%), Hungary (80.2%) and United Kingdom (80.0%).
While being states with strongest economics systems, Germany and France have to push their effort to repair crisis European Union is coping with, to avoid economic system from falling down due to decreasing Euro Zone, by push down the treat as a Europe zone member, so all country should fulfill the obligation as requirement to defending the stabilization of economics in this area, and as quickly make the economic stabilization in European Union.

B.     Problems
1.      What background causes European Union crisis?
2.      How to cope the crisis in European Union?
C.    Objectives
1.      Find the arrangement solutions of the crisis in European Union
2.      To find the causes of crisis in European Union

CHAPTER II
Discussion
A.    The background causes the European Union crisis
European Union crisis begin in 2011 when global economics crisis back to occur and reach the culmination, this time in European area. Interesting to tracing, what actually happen in European countries so this one of the most prosperous area in the world then involve with problems that worried can pulled down one single currency system they have. Tracing European crisis simply can done by put the chronology.
Before, need to be known that European area in this chapter means all countries in Euro Zone, countries which using Euro as single currency. Today there are 17 member countries join this euro area, such as: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherland, Portugal, Slovakia, Slovenia, and Spain.




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            Europe debt crisis coming from Greece, which then continues to Ireland and Portugal. That three countries having debt bigger than their GDP, and also already experiencing deficit (the country output bigger than GDP). The crisis start felt in the end of 2009, and more discussed in middle 2010. At 2 May 2010, IMF finally agreed the bailout package as €110 billion to Greece, €85 billion to Ireland, and €78 billion to Portugal. Then the worries of crisis that will happen stopped for a while. Effects of this European crisis quite impacted to IHSG, which those times descend rapidly from 2,971 to 2,514.
            Greece maybe is the result of failed government policy in the past. In 1974, Greece starts the new stage of governmental, from military junta to socialist. This new government then takes many debts to defrayed subsidy, pension fund, government worker salary, etc. Those debts increase until 1993, Greece debt position already above its GDP and until now still. Nowadays, Greece debts predicted already reach 120% from its GDP position, where many analysts predict that the real data maybe bigger than that.
            Until early 2000s, no one pay attention to the facts that Greece debt already too much. Instead, from 2000 to 2007, Greece noted economics growth to 4.2% per year, that is the highest number in Euro zone, result from many foreign financial capitals to that country. The condition turn back when post global crisis 2008 where other countries start to rising from recession, two of primarily economics sector in Greece is tourism and shipping sectors, precisely noted the decreasing of income to 15%. People then realize maybe there is something wrong with Greece economics.
            The condition become worse when early 2010, knowing that Greece government pay Goldman Sachs and some other investment bank, to straighten up transaction that can hide the real number of government debt. Greece government also known had been tinkering the statistic data of macro economy, so their economics condition look fine, whereas not. In May 2010, Greece once again noticed had experience deficit up to 13.6%. one of the main cause of that deficit is there so many tax blackout case, that predicted already disadvantage country up to US$ 20 billion per year.
            When IMF gives loan, IMF introduces some requirements of saving budget to Greece government. Such as cut the subsidy for government worker and pensioners, improvement of income tax to 23%, improvement export tax of luxury stuff, gasoline, cigarette, and alcoholic beverage, to government company must decreased from 6000 to just 2000 companies. Thereby, this policy so difficult to realize.
            On the same month, when Greece government announce budget saving policy, Greece citizen do large scale demonstration in Athens to decline that policy. Until now, there is no certainty yet, whether Greece government success applying all those policy or not. One of famous debt rating institute, Moody’s, still decide the debt rating of Greece on one lowest level, that is CCC.
           


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B.     Methodology
1.      Research methodology used by this paper is descriptive method
2.      Data gathering technique use documents and literature list because almost all data founded from data gathering through newspaper and internet.


 CHAPTER III
Closing

A.    Conclusion
European crisis development unstopped till here, today European leaders especially Prime Minister if Germany Angela Merkel, and President of France Nicolas Sarkozy, are making program to finish the crisis in European area. Whether Euro Zone will survive and continued their success as pioneer integration of currency as they hope all this time, or the other way precisely fall down and make crisis in other area?
A simple learning but important from the crisis occur in Europe is the importance of carefulness before decide whether all country in the same standard position to have one single currency system and also another learning that how much importance of debt to development of a country, but without ability to manage it, that thing can be trick of  the fall of that country itself.

B.     Suggestion
1.      Advisable all member countries of European Union cooperate in overcome this crisis so Euro Zoe became stable again.
2.      To the countries who through the crisis as Greece, to fix their government system and country structure so not involve in long-term crisis.



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