The EU is in the midst of multiple crises, some immediate, others more long term. At times like these, what is likely to happen to climate change policy?
The immediate Greek debt crisis seems to have been solved by Eurozone and IMF pledges of many billions of euros. In turn, this has renewed confidence that any similar crises in Spain, Portugal, Ireland or other member states would be tackled similarly and controlled. Markets have pulled back from the brink of panic, but the longer-term outcome may still be serious. German voters are already displeased by their government’s decision to bail out Greece and, in the absence of effective structural change to the indebted economies, the regular flow of funds could be necessary for many years to come.
An alternative would be for Greece and countries with similar problems to leave the Eurozone and devalue their currencies sufficiently to regain their competitiveness, but the end of monetary union would be a difficult political pill to swallow. In the meantime, the UK is experimenting with a fully-fledged coalition for the first time since the Second World War. Maybe this will be part of a major reform of their political system, but first the new government has to prove itself by getting a grip on the horrendous debt problem it has also inherited. Markets may stop worrying about the Eurozone, but could turn their attention again to the crisis across the Channel, with who knows what consequences. Confidence is a fragile thing.
The recession caused by the banking crisis has itself exposed the underlying weakness in the economic models of many developed countries. Fixing this will require a period of relative austerity of a kind which many Europeans have never experienced. But at the end, this does not mean that Europe will regain its international competitiveness, let alone meet the high aspirations of the EU as a bloc. China and other large emerging economies have accumulated large trade surpluses, while growing much faster than the currently industrialised world. European countries, while continuing to offer their citizens a very comfortable way of life, will almost certainly become much smaller players on the world stage.