Naval Postgraduate School

Germany, the European Union, and the Euro: the Primacy of Politics in Treasure Naval Postgraduate School

Publisher Marketing: The Federal Republic of Germany has arisen to take a leadership position in the Eurozone sovereign debt crisis. This quasi depression has highlighted the economic interdependence of the Eurozone member states and has exposed the fundamental weakness of the lack of a political union between members to coordinate a timely fiscal response. This thesis examines why the Federal Republic of Germany became the cornerstone for Eurozone monetary stability; how the country contributed and what it has sacrificed thus far towards the crisis; and surveys what Germany must do in the future to ensure European financial stability. Germany's current commitment to the continent is examined here through the treaties that economically linked the European nations and formed the foundation for the Eurozone. In addition, the weaknesses of periphery member states that contributed to the crisis and the substantial sovereign economic bailouts and recovery packages that have been enacted by the Troika are analyzed. The thesis then examines the three options that are available to the Eurozone: to continue to "muddle through" the crisis, to enact substantial reforms, or to splinter and break-up the Union. The results support the choice for greater political integration and the need for the issuance of Eurobonds.