ABSTRACT

This chapter outlines the divergent underpinnings of the Eurozone debt crisis as it unfolded in the three countries (Greece, Ireland, and Portugal) that received international bailouts between 2010 and 2011. The cause of Ireland's sovereign debt crisis was the near-collapse of Ireland's six major banks, for which the burst of the housing bubble and the worldwide economic downturn led to a 'liquidity' problem. The chapter focuses on failing of the European Monetary Union (EMU) experiment, which harmonized monetary but not fiscal policy in its member states, to include Greece, Ireland, and Portugal. In addition to these structural deficiencies, the response of the European Union (EU) to first the Global Financial Crisis and then the emerging sovereign debt crisis has also been criticized from a number of angles. The chapter shows the relationship between democracy, development strategies, and recovering from the Eurozone debt crisis.