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This year’s Report on the State of the European Union (2015-16) exam-
ines the delicate political situation currently faced by the EU, a complex
combination of events that has revealed its underlying weakness as a su-
pranational organisation with historic ambitions. After a 20
th
century that
was largely propitious for a European Community that rose from the ash-
es of the two world wars, the start of the 21
st
century has been marked by
an air of frustration and pessimism. Moreover, it is those who were most
strongly in favour of the European project and most firmly convinced of
the importance, benefits and direction of the EU whose ideals have been
hardest hit by the crisis. Yet they are also best equipped to keep fighting
to preserve the values of the world’s most democratic continent.
The contributions to this report examine the reasons why these values,
fundamentally based on the welfare state and the rule of law, have been
and continue to be severely affected by the critical situation facing the EU
in 2016. Firstly, there is the social cost of a financial crisis from which we
have yet to emerge. Three chapters of this report are given over to the
effects of a European Union that has developed with economic, trade and
monetary aspects at its core, focusing on monetary policy in the Eurozone
(Adrian Zelaia), the implementation of economic governance (Maria Joao
Rodrigues) and inequality (Michael Dauderstät).
The financial crisis that began in 2008 is more than just a crisis, it is a
structural problem. This explains why the fiscal (austerity) and monetary
policies deployed by Brussels have been unable to reverse the deflationary
trends of the economy and spiralling levels of debt. In spite of the expan-
sionary nature of ECB monetary policy under Mario Draghi, the underlying
economy remains unchanged and employment has yet to recover. Europe
has not returned to the macroeconomic figures of 2007 and lags far be-
hind the performance of the United States, which has applied a braver,
Introduction. The perfect storm
Diego López Garrido