Europe is in the midst of a financial crisis. Many analysts are concerned that a Eurozone banking collapse could cripple the global economy, but some believe the impact on the U.S. will be minimal.

The European Union established the euro in 1992, and a decade later the member states began using the currency. Members of the Economic and Monetary Union (EMU), or Eurozone, are required to meet certain economic requirements in order to maintain membership.

Following the global recession of 2007-2009, Greece admitted it had a severe debt problem, as reported in a BBC News timeline of the crisis. As Greece struggles to negotiate with the European Central Bank and other lenders to develop a loan agreement, other European countries, like Ireland, Italy, Portugal and Spain, have begun to buckle under crushing debt. Some countries have publicly appealed for help from the E.U. and received bailouts.

Now, many are worried that austerity measures, which are required by lenders to help survive debt problems, will fail in Greece, and the country will either leave the Eurozone or collapse within it, crippling the union from the inside. Fears of a bank run across the Mediterranean remain high.

Will Greece exit the Eurozone? If so, will it lead to a domino effect of other member states leaving? And how will this affect the United States, which relies on Europe as a major export market?

America Can Weather the Storm

In considering possible outcomes for the European sovereign debt crisis, Reuters has proposed a scenario that the U.S. could most easily navigate.

If Greece leaves the Eurozone and returns to the drachma currency to ride out its economic problems alone, America’s exposure could be minimal, especially if the country’s exit doesn’t trigger a mass exodus of other troubled economies. As Reuters points out, “Greece accounts for only 2 percent of Eurozone GDP and U.S. exports to Greece are negligible. So too is U.S. credit exposure.”

Moreover, U.S. trade with Europe is varied in a such way that a Eurozone collapse might not have a severe impact. A drop in U.S. exports to Europe “is a weight on GDP growth in the U.S., but this category is not large enough by itself to cause a sharp slowdown,” Dean Maki, chief U.S. economist at Barclays Plc, told Bloomberg News.

“If exports are down by 10 percent because of the crisis (a huge falloff), this only knocks around 0.2-0.3 [percentage points] from U.S. GDP,” Dean Baker, co-founder of the Center for Economic and Policy Research, explained to Talking Points Memo.

Accenture interviewed leading CEOs and CFOs about their reaction to the Eurozone crisis. The management consulting firm found that, generally, the surveyed businesses accept that a “peripheral country” may be forced out of the Eurozone, but that the euro will hold. While potential consequences of a withdrawal include recession, companies are implementing safety nets to deal with any problems that may arise.

Counterpoint: Brace for Disaster

In alternative scenarios, the U.S. would be hit hard by a Eurozone collapse.

The “nightmare scenario” outlined by Reuters occurs if Greece exits the Eurozone, but does so in a messy way. If Greece “crashes out of the euro,” American exposure could be severe.

“At the very least, the U.S. and global economy would fall back into recession, and some economists warn it would be far deeper and more dangerous than the one of 2007-2009,” partly because of the tools used by financial markets, Reuters says.

If the Eurozone “stumbles along,” the Greek drain on the E.U. economy could seriously, albeit slowly, impact the American economy. “Ongoing volatility in financial markets and slow-to-mildly negative Eurozone growth would continue acting like a low-grade fever weakening U.S. growth,” Reuters posits. “This already is the baseline scenario for most analysts’ forecasts.”

This outcome depends on the election of a pro-austerity Greek government, which happened on June 17th when Greeks returned to the polls to force a new election after a parliamentarian coalition deal couldn’t be struck, as BBC News explains.

But could the euro itself fail?

Niall Ferguson, speaking at the Swiss Institute of International Studies, confirmed that not only could European currency fail, but the U.S. dollar could be next, according to the International Relations and Security Network blog. And we shouldn’t be surprised. As a precedent, Ferguson cited the Latin Monetary Union of France, Belgium, Switzerland, Italy and Greece, which collapsed in 1927 because of asymmetric fiscal problems — “by the divergence between French fiscal probity, on the one hand, and Italian and Greek fiscal laxity on the other.” In the current situation, Ferguson argued that the lack of a federal system in Europe focused on a united response could doom the Eurozone.

This absence of coordinated action is often cited as a reason the euro is in trouble. “Germany, for its part, has been calling for a reduction in Eurozone countries’ sovereign powers, but this is most unlikely to happen,” Firstpost claims. “Given Europe’s unwillingness to coalesce into one common political and economic entity, one can presume that it can’t solve the euro crisis.”

Although the international community is now working to resolve problems in Greece, Italy, Spain and Portugal, the U.S. is already seeing negative effects. Figures from the U.S. Department of Commerce showed a 4.8 percent drop in U.S. exports to the E.U. this April compared to April 2011.  Outbound container volumes from the East Coast fell 2.6 percent in April over the previous year, with a 0.9 percent drop in March.

“The decline in Europe will weaken our exports over the long term,” Michelle Meyer, senior U.S. economist at Bank of America Corp., told Bloomberg News. “We look for the trade deficit to widen not only to the Eurozone but developing economies as well.”

However, even if Europe doesn’t collapse, many U.S. manufacturers are increasingly pessimistic. “There is a good chance that in Europe, we end up with a Japanese decade,” David Cote, chairman and CEO of Honeywell International, said at a conference.