What is really going on in the in the EU periphery?
Modern national economies are characterized by the accumulation of public debts and state deficits. These policies have two main pillars: Firstly, the low taxation of large enterprises, while the taxation rates are quite high for the majority of the society. Secondly, the states were borrowing (and still borrow) huge loans in order to support the big companies, the banks, to pay their public obligations (wages, pensions) and to increase the level of their imports. The “financial games” play a major role in this field. This situation was deteriorated by the reoccurrence of the crisis, an intrinsic characteristic of the nowadays dominant socioeconomic system. The ground principles of the system inevitably lead to the appearance of crises in several phases of history. The current crisis started in 2006 in the housing sector of the USA (due to the unfeasible payment of loans), and spread all over the world influencing mainly the developed states. The consequences of the crisis and mainly the consequences of the policies implemented to overcome it were stronger mainly in the developed states of the EU and USA.
While the world was watching the US economy and its financial institutions stumble under the crisis, they knew little about what was coming towards Europe. What the European public did not know was the amount of US mortgages purchased by the European banks. These loans created the current conditions, centering the economies around these debts. The fall of the housing bubble pushed the banks and the insurance companies into bankruptcy, forcing many states in the EU (Hungary, Greece, Ireland) to get loans from the IMF and the EU (and not from the market) to save their financial institutions (banks and insurance companies). In exchange, IMF chiefs control these states’ economic and social policies.
The situation in the periphery of EU is much worse than the core states of the union. Particularly in Spain, the housing bubble has led the economy of the state in relatively bad situation: the percentage of the debt during the crisis increased by 20%, reaching a total of 60% in 2010. At the same time, the situation in Greece is characterized through the years by high levels of illegal tax evasion and legal tax exemption and reductions for the firms: if that was avoided during the 2000-2008 period, the Greek state would have earned 95 billion euros. In addition, the 2004 Olympic Games resulted in an extra deficit of 5 billion euro. This situation was worsened by the crisis: in 2008 the debt was 110% of national GDP whereas in 2010 it reached 142% of national GDP. The Greek state was able to borrow from the market until the spring of 2010, when the interest rate reached almost 8%, while the average interest level is 3-4%. So, the Greek government decided to put the state under the supportive mechanism structured by both IMF and EU resulting in a debt of 110 billion euro. In exchange, the IMF and European Central Bank decide for all the political and economic aspects in Greece.
The governments decided to face the crisis and its consequences by imposing austerity measures and cuts, obligating the workers and the youth to pay for it, despite the fact that they were not responsible for the crisis. Particularly in Spain the measures of the government had as a result the increase of the unemployment rates from 8% (2007) to 20% in 2010, and especially the youth unemployment rates rocketed to 45% in May 2011. In addition to that, they forced short-term contracts, substituting full-time with part-time jobs which influenced also the salaries: the mean wage now in Spain is 25% lower than EU average.
Similarly, the Greek government measures focused on declining the debt through dismissals in public sector, cuts in education, healthcare and social security (wages and pensions) and increasing labor elasticity. What were the results of these policies? The unemployment increased from 8% in 2007 to 16% in March 2011, the minimum wage declined from 700 to 560 euro. However these measures aiming at declining at least the debt totally failed: the debt increased by 9% in one year. So, currently a new packet of measures for another 60 billion euro loan is being discussed, which will privatize the majority of public sector, decline even more the wages and increase the cuts.
But what happens in reality? According to data from the OECD and Eurostat (2011) Southern European annual working hours are longer than the Northern ones (in Greece it is 2119 hours, while in Germany it is 1390). While long working hours in Northern states would imply greater financial benefits, in the South these hours are going towards paying the debt and the financial aid to banks (in Greece, in the last two years 58 billion euro were given to banks). Given this background, we are in front of a new trend in Southern Europe: youth deprived of future in their own countries.
In this context the Dutch media present the southern countries as being in an entirely different situation as the northern countries. Yet the Dutch situation is, for reasons similar to the southern ones, getting more precarious. The austerity measures of the right-wing government are beginning to have an impact on public transportation, which in some places will be suspended by 40%. Moreover, the educational system, through the introduction of higher financial obligations for the students and lower public funding will be less available to the average youngster. The measures prepared for the Health care system, the Social security system and other public sectors are going to have even bigger consequences. A good example of this is the rising of the retirement age from the normal Dutchmen from 65 to 67, while the people responsible for the crisis are again getting big bonuses.
And what is the reaction of the people in front of all these? What are they doing in order to face this situation? Somebody could say that they were sleeping and not reacting until this May. However, the demonstrations of 1st May in all Europe and the movement of May 15 in Spain show something different. People started react, to go to the streets and occupy the squares across all Europe. Spanish “Democracia Real” which began on the 15th of May sparked the “Alithini Dimokratia” movement in Greece ten days later. This period efforts are made to have the “Echte Democracie” in the Netherlands as part of the general rise of a European “Real Democracy”. People are in the streets, react, discuss the situation and decide in a real democratic way for their future. They speak against the situation of “others deciding for their future without them”.
We are expecting you!
Real Democracy – Open Assembly of Groningen