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25 Ιανουάριος 2013

Solidarity and cooperation of the South for a way out of the crisis

by Nikos Chrysogelos 

MEP Greens/ EFA group EP


In Greece, unemployment is currently over 25% while among the young surpasses 55%. Many children have no access to vaccination any more, while the unemployed have to pay for visiting the doctor or their medicine since they are not insured. Over 20% of the citizens have no access to public health services today. 

In Spain, over 500.000 families have lost their home during the last three years, the unemployed are 6.000.000 while public debt doubled from 40% to 80%, despite the measures or because of the austerity measures.

In Portugal, one in six people has lost his/her job and many businesses went bankrupt. 10.000 children face today nourishing problems.

20% of the problems are due to the crisis while 80% are due to wrong austerity policies that lead to recession, decline in GDP, rising unemployment and public debt, rather than consolidating fiscally. Moreover, the dependence of countries in southern Europe on imported oil, the construction bubble and the rescue of banks through public funds, play an important role in all the countries of the South, intensifying the crisis.

Improper governmental practices and structural problems in each country may exacerbate the crisis but they are not solely responsible for the explosion of debt that occurs after the implementation of austerity policies. Restrictive policies and austerity lead to an increase in public debt in all countries where they are implemented, but they will also create problems in countries which until recently have surpluses (Germany, Netherlands etc).

These findings emerged from the workshop "crisis and social implications" organized by the Green MEPs from Greece (Nikos Chrysogelos), Spain (Raul Romeva) and Portugal (Rui Tavares), in November 2012; this was one of the few initiatives until today to find institutions of southern Europe that will discuss together the crisis and, primarily, a way out of it.

As I stressed in relevant questions to the European Commission [1] as well as speaking in the European Parliament, the troika until recently did not dare to admit that the false predictions and models used lead to increasing problems instead of solving them - namely the destructiveness of the project - and discuss a more balanced alternative plan as a way out of the crisis. But now this is an open secret.

Few days ago Paul Thomsen confessed that austerity in Greece was wrong. Yet a new report on behalf of the International Monetary Fund, on 3.1.2013, admit once again that the predictive models used to promote policies that address the fiscal crisis posed significant underestimations in fiscal multipliers.

A report, however, of the European Commission months ago, estimated that any multiplier above 0.5 specifically for Greece, even in healthy fiscal periods, causes an increase in debt. Yet the fiscal multiplier in a recession it is estimated to exceed 1, perhaps reach as high as 1.7. As a result the restrictive policies do not lead to a reduction but to a dramatic increase in debt, making it unsustainable.

Following these incorrect prediction models and taking decisions of brutal fiscal adjustment and austerity, the Greek debt crisis will cost to the European citizens 240 billion by 2016. In Greece they have caused more than double the unemployment, the collapse of the real economy, even of viable businesses and poverty in a significant percentage of the citizens. By 2016 65 billion will be removed from the Greek citizens.

In Greece today we are experiencing a period of "optimism in words", but in practice social collapse. There is no plan for a way out of the crisis, priorities or suggestions for maintaining social cohesion. Political decisions are now exclusively associated with the disbursement of payments and a vague but not measurable hope to restore confidence in the markets and investors.

The Troika and the Commission in particular, fail to consider other solutions that are now proven existed and still exist; they insist on austerity policy. Moreover, the Greek political system is unable to form through a sincere dialogue between all political parties and particularly with the social and professional organizations, a balanced, socially equitable plan to exit the crisis.

A state of stability in the levels of 2011, and no worsening of the recession, could reduce the debt by 21%.

Participants in the workshop came to the conclusion that the formation of a new joint strategy out of the crisis is a matter of survival. This requires cooperation between the social partners and civil society at European level in order to create "from the society" an alternative plan with pillars social cohesion, employment and economic sustainability. There is also the need for a fair fiscal consolidation effort.

In the workshop the initiative "Ulysses" was presented from representatives of institutions and green MEPs of the European South. "Ulysses" is an effort aimed at changing the growth model and economic policy of the EU from the periphery to the center in order to ensure sustainable development and social cohesion.

The "Ulysses" initiative is actually an open communication platform aiming to coordinate social actors across Europe and promote alternative solutions against present’s political impasse; a symbol of rejuvenation of the European idea and integration.

No country, no society alone can cope with the crisis. Solidarity is a precondition for survival, not only for countries in crisis, but also for the very idea of Europe.


[1] Relative proposal as well as my question to the European Commission here 


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