The European chimera is fading away

Thursday 23 May 2013

All the versions of this article: [English] [Español]

Authorship: Roberto Savio.

Editorial and Canal: Latin American Information Agency (Agencia Latinoamericana de Información) (ALAI).

Type of document: Article.

Language: Spanish.

Theme: Economy.

Keywords: Economic juncture analysis, Political juncture analysis, Economic, social and cultural rights, Unemployment.

Country and Region: Rome, Europe.

Description: Analysis and position article.

Rome, May – The European Union (EU) has warned all its citizens about the fact that they will have to face more economic difficulties. According to the report published on May 3, the European Commission foresees that the economic deterioration in the region will continue until 2015. And it ends just like any other study of that type saying that later on recovery will come.

It is estimated that unemployment in the Euro-zone will reach 12, 2 per cent this year, way ahead of the 11,4 per cent reached last year. In Spain, this indicator will increase in a 27 per cent, and in Greece, after three years of a brutal suffering, unemployment will have an increase in 2,7 per cent to reach the figure of 27 per cent.

This trend will be devastating for the youth. It is estimated that in Spain unemployment among the youth will reach 52 per cent. We are taking away the future from a whole generation.

The same trend is seen in many rich countries from the northern part of Europe. In Germany it is foreseen an economic growth of only 0, 4 per cent for this year, and from Austria and The Netherlands the panorama also tends to go into a decline.

The crisis is undermining the bases of the European identity. After the Second World War, the Europeans were able to have a social security network to protect those less fortunate, maintained those unemployed until they were able to return to work and it was protecting their dignity. It was a very different dream from the American dream, of hoping to climb to the peak of the economic and social status through the individual efforts, without any participation of the State.

Now, austerity is destroying the social protection network and the European dream is fading away, since according to the criteria of most of the economists, there is no way in which the economy might incentivize a lot of people.

While the United States and Japan has opted for the option of the economic stimuli and they are implementing huge monetary expansions that already are showing some good results, Europe has undergone through an inverse path: that of eliminating the budgetary deficit at all cost, through a drastic reduction of the public expenditure and the increase in taxes. And in spite of the evidence of its failure, this type of policy is kept untouched.

During a visit paid to Berlin on April 30 by the recently elected Prime Minister from Italy, Enrico Letta, the German Chancellor Angela Merkel said: "I think budgetary consolidation is associated at present, in a very interesting way, with the word austerity, which outside this framework is not used in Germany. We were not even familiar with this word before the crisis”. And her Calvinist Minister of Finance, Wolfgang Schauble, joint this criteria by saying:"Growth and austerity are quite perfectly compatible ".

The European Union, aside of losing its shine, is also feeding a growing feeling of resentment.

And as a consequence, resentment is also growing among the population. The same day, in which the European Commission spread its report, in Great Britain the anti-European party UKIP stroke a victory when it got 25 per cent in the local elections.

Parties with the same line of orientation are emerging in other countries, from Belgium to the Netherlands, from Austria up to Finland. And in Germany, for the first time a time supporting the abandoning of the Euro (Alternative for Germany) will be running for the elections in next September.

The lack of skillful leaders is undermining the foundations of the European Union. In Spain, the Prime Minister, Mariano Rajoy, enjoys a comfortable majority in Parliament, but the popular protest is expressed daily in the squares all around the country.

Likewise the President of France, François Hollande, enjoys a solid Parliamentary majority, but his popularity rate has decreased in a 25 per cent. The situation in Portugal is practically the same, while in Greece the anti-European party Syriza is the second in the country and in Italy the new government has an uncertain future, with a young Prime Minister engaged in the same old policy.

Italy represents a special case of chronic absence of synchronism with Europe. The end of the Cold War entailed the disappearance of the modern Italian political parties, the Communist Party and the Christian Democratic Party, and the creation of a new system out of which Silvio Berlusconi emerged, the richest man in the country and the owner of a powerful media empire, who created his own party to escape from economic and legal personal problems.

He managed to develop into a skillful Politian and since then, Italy has been divided in those who follow his lead and those who oppose Berlusconi, the latter a group formed by the whole Italian central-left and left wing.

Quite a different case from other European left-wing parties are the Labor Party in the United Kingdom, the Social Democrats in Germany and the Socialist Party in France, which were created in the previous period to the Cold War and they were not created to counteract the one-party person, such as the People of Freedom by Berlusconi.

Out of this anomaly, another anomaly emerged, the Movement Five Stars, founded by Beppe Grillo, an actor, a comic, transformed into a political adverse to the existing political system and to the Euro. Either of these forces is out of tune with Europe, and it is a fact that as long as Berlusconi will not retire, Italy shall continue divided and elections will not yield conclusive results.

The core of the Italian debate will continue being an orphan from a real political agenda. Argentinean most probable are those who could understand this situation quite easily, since in their country is still alive the polarization between the followers of Peron and those against Peron.

The announcement by the government of Switzerland, that as of now, its labor market will no longer be opened to European citizens, who will need to get a permit, has been transformed into a paradigmatic symbol showing a deterioration in the image of the European Union.

Meanwhile, Germans are convinced of the fact that they should not place their wallets at the disposal of the European from the south, who work less, who evade tax payments, who expend beyond their real possibilities and who instead of swallowing the bitter medicine of austerity, they expect tax-payers will bail them out. Something quite different from the old generation of pro-European German leaders, such as Helmut Kohl and Helmut Schmidt, whose conduct was always that of embedding in Germans the value of Europe.

Nevertheless, a study done last year by the Kiel Institute for the World Economy showed that, in 2011, Germany managed to save an equivalent to 11.100 million dollars, due to the fact that the cost of the credit is much lower than in southern Europe. And according to a study done by the Bertelsmann Foundation, the action of abandoning the Euro will have a cost for Germany equivalent to around 1,6 billion dollars over a period of thirteen years, with an average decrease of 0.5 per cent of the GDP between 2013 and 2025.

The whole of Europe is expectant on the next German elections in September, when for the first time a decision will be made regarding the fact if the Prime Minister Angela Merkel remains in power, which is more than probable, and if she will maintain or modify her strict stand favoring austerity that is prostrating Europe.

So, will Merkel change her stand against all, even against the International Monetary Fund, that condemn excesses of austerity? No one really knows that, but many are wishing that.

But the world will not stand still waiting for Europe to solve its contradictions. A study undertaken by the United States National Intelligence Council estimated that the participation of the United States, Europe and Japan in the world production will decrease from a present 56 per cent to a 26 per cent in 2030. These projections might be come forward if, as it is probable, the European deterioration gets worse.

Meanwhile, the following information was registered, in 2008 China displaced the United States as the country with largest saving accounts in the world, on the brink of being ahead Europe. The forecast is that in 2020, financial assets in emerging markets might be multiply by two or reaching quite close to that figure and if the European deterioration shall continue these projections might come sooner.

Time is not on the side of Europe.

Roberto Savio Founder and Emeritus President of the news agency IPS (Inter Press Service) and published of Other News.

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