Following Greece, Ireland became the second eurozone country that was rescued by the European Union (EU) and International Monetary Fund (IMF) from a devastating debt crisis.

The approval by EU finance ministers Sunday of an 85-billion-euro (US$112-billion) aid package for Ireland appeared to have little effect in relieving market concerns over the contagion risk as the euro continued its decline Monday.

From Greece to Ireland and now with Portugal and Spain widely speculated to be the next victims, a domino effect appears to be at work. The fate of the euro is again called into question.

Contrary to the widespread claim that the eurozone is doomed to break up, the single currency will not fail, although it is facing the toughest challenge since its birth in 1999.

Ireland's economic fundamentals are much stronger than those of Greece. Since it has already been rescued, the Celtic Tiger can recover more easily from the current difficulties and will be no longer cause for concern.

What is more important for the stability of the euro is that the EU has enough means at its disposal to deal with the crisis. Drawing a lesson from the mess in bailing out Greece, the EU set up a standby rescue mechanism in May for possible support to other eurozone countries which may follow Greece.

Ireland is the first to ask for help from the mechanism, which can cover financial needs up to 750 billion euros (US$986 billion). Unlike Greece, the EU wasted no time in rescuing Ireland in order to stem contagion.

If Portugal needs a bailout, as feared by the markets, the mechanism has enough money available for Lisbon. It is estimated that the costs of rescuing Portugal would amount to only 50 billion euros (US$66 billion), so there are still 620 billion euros (US$815 billion) left for more bailouts.

If the crisis engulfs Spain, it would spell big trouble, but not the end of the euro either.

Spain is the fourth largest economy in the eurozone, accounting for around 11 percent of the total economic output. It is nearly twice the aggregate size of Greece, Ireland and Portugal.

Any bailout of Spain would be significantly higher than the existing rescues. If the bailout is also twice the total for Greece, Ireland and Portugal, it would be no more than 500 billion euros (US$657 billion). In fact, the debt problem in Spain is not as serious as in the other three countries. So the existing mechanism can handle Spain.

Though recent drops of the euro support the view that the single currency is at risk, analysts say the single currency is now actually overvalued against the US dollar.

As a major achievement of European integration, the euro is a landmark in the world's monetary history. It has become the second largest reserve currency as well as the second most traded currency in the world after the US dollar.

Despite its shortcomings, which have been exposed by the debt crisis, the euro has brought economic benefits and currency stability to its members. A breakup of the eurozone would be politically unacceptable.

(Xinhua News Agency December 1, 2010)