Global Policy Forum

European Governments Are Running Out of Options

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Several governments in Europe are currently struggling to survive as they are caught between the technocratic austerity demands from "the troika" (EC, ECB and IMF) and uprisings by the people who are suffering through the "savage savings programmes." The Guardian's Ian Traynor discusses the role of popular perception in European politics, showing how in troubled countries governments are seen to be "in cahoots" with the financial sector that was largely responsible for the current crisis. On the other hand, governments of "creditor nations" are under increasing pressure as electorates no longer want their tax money to go to "profligate" countries. The perceptions suggest that the crisis is getting seriously out of hand, as the technocrats make matters worse and creditor governments tend to their voters.

By Ian Traynor

February 6, 2012



For the governments of Europe in the midst of the EU's worst-ever crisis, it is getting increasingly difficult to reconcile internationally ordained austerity packages with popular acquiescence in spending cuts, job losses and slashed budgets.

Whether using the euro or not, governments from the Baltic to the Balkans are struggling to stay in office while implementing the savage savings programmes dictated by technocrats from Brussels, Washington and Frankfurt.

The Romanian government's fall on Monday after weeks of civil unrest in Bucharest is but the latest example. In Greece, another uneasy coalition may be falling apart as it balks at meeting the severe terms of the troika of the European commission, the European Central Bank and the International Monetary Fund (IMF) needed to secure a second €130bn (£108bn) bailout in time to redeem a large tranche of its debt next month.

Athens will again be seething with rage on Tuesday as two of the biggest unions stage a 24-hour general strike. Trapped between the demands of their constituency and the dictates of international creditors, governments and political leaders all across Europe are running out of options.

The problem has been made worse by the popular perception in several countries that the political class is akin to a mafia: politicians in cahoots with bankers, property developers and businessmen fleecing the country to the point of bankruptcy then leaving the public to pick up the pieces; wage cuts, job losses, higher taxes, health, education and retirement services decimated, all of it policed by faceless technocrats flying in from Brussels and Washington.

Such has been the perception of the Boc government in Romania, ditto in Greece and Ireland.

Since the eurozone crisis erupted two years ago, governments in all three so-called "programme" countries – those being bailed out by the EU and the IMF: Ireland, Portugal and Greece – have fallen as a direct consequence.

The crisis also brought down the seemingly insuperable Silvio Berlusconi in Italy, as well as José Luis Zapatero in Spain.

However, the political pain has been felt not only on the debtors' side of the bailout equation.

Among the euro creditors, resorting to taxpayers' money to rescue the profligate has proved highly unpopular, contributing to a change of government in Finland, a series of regional election losses for the Christian Democrats of the German chancellor, Angela Merkel, and a harsher, more eurosceptic mood in the Netherlands.

The crisis is now playing strongly in Europe's key 2012 election campaign in France, where Nicolas Sarkozy has overseen a loss of the country's credit-rating parity with Germany and where the leftist frontrunner, François Hollande, is pledging to ease up on the austerity deemed necessary to shake up the country.

In the EU, but outside the eurozone, the debt crisis is also taking its toll, as shown by the fate of the Romanian government. Next door in Hungary, the divisive prime minister, Viktor Orbán, is having to eat humble pie in a U-turn on economic policy, reversing his previous spurning of outside help in order to find a €20bn lifeline from the EU and the IMF.


 

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