With the G20 finance ministers meeting in Paris to ponder the eurozone debt crisis, time for a quick look at how the PIIGS are doing… Now that Slovakia has, finally, acquiesced to the inadequate European financial stability facility… At the cost to the Slovakian government of a general election in March 2012…
In Portugal the government is seeking to tighten the austerity belt further, and the international rating agencies cut Spain’s credit rating. The Guardian’s Jon Henley is on a “Europe on the breadline” tour, and in the Iberian peninsular he’s found some surprisingly cheerful people – for now.
Some of it is down to pride. And because, as bad as things are, they’re not yet as awful as they will become. “The worst will be next year,” predicted Ana Lobo in Lisbon. “Now, it’s almost still summer. In January, when it’s cold and dark, electricity, public transport, bread will go up. Taxes too, a lot. And pensions and benefits will be cut. Then it will really hit.”
Whatever the explanation, travelling through parts of the Iberian peninsular this past week it is not immediately apparent that the place is in the grip of its worst economic crisis since the second world war. Cafe terraces are, if not full, at least well occupied. Some shops may be boarded up but many more remain open and doing business. Life continues.
As always in such times, people are doing fine – until one day, they’re suddenly not. Then there’s no shortage of stories. Luis Alves, a 30-year-old freelance graphic artist in Lisbon, survives only because he works for clients outside Portugal. “The market here has died,” he said. “Banks aren’t lending. Everything, economically and politically, is blocked.”
Italy continues to drift along economically with no serious plans for structural reform to stimulate growth, no prospect of the reform of an electoral law that is commonly referred to by a Latin tag meaning “fit only for pigs”, and no clear line of succession when its billionaire leader – who celebrates his 75th birthday this month – finally does decide to retire.
Ireland’s Taoiseach Enda Kenny is denying that there is a spilt in his coalition cabinet ahead of budget negotiations, as the OECD calls for more austerity to reduce the Irish budget deficit at a faster pace. [“I think we have to get on with what we have now…”? – Ed] And there’s still the small matter of disposing of those state assets – as agreed with the EU-IMF.
“The success of the programme continues to depend on mobilising adequate financing from private sector involvement (PSI) and the official sector, ” the troika statement continued.
“Ongoing discussions on PSI together with assurances provided by European leaders at their 21 July summit suggest that the programme remains fully financed,” it said.
The statement said that, “the fiscal target for 2011 is no longer within reach, partly because of a further drop in GDP, but also because of slippages in the implementation of some of the agreed measures”.
However, it added that that 2012’s deficit target of 14.9bn euros should be met if there was a “determined implementation” of the government’s austerity plan.
The inspectors said they believed Athens was committed to its privatisation plan. Ministers hope to raise 35bn euros by the end of 2014.
The troika said the key to achieving that goal was to ensure that the privatisation fund, which supervises the sell-offs, remains independent.
The auditors also praised a decision to end sector-wide collective labour agreements as “a major step forward”.
Yes, well… The BBC Europe editor, Gavin Hewitt, spots the potential flaw in that plan – the Greek people.
One of the new austerity measures involves using the electricity bills to raise funds from a property tax. Yet protesters have occupied the printing offices of a Greek power company. If there are no bills, no-one need pay.
Arguably the key ministry in this crisis is the finance ministry. Yet finance ministry officials have called a 10-day strike from from 17 October.
The country is crucially dependent on tourist income. Yet yesterday protesters were blockading the Acropolis. There are plans next week for the seamen who operate the ferries to the islands to strike. Garbage piles high in the streets as municipal workers blockade the landfill sites.
And my eye was caught by this paragraph in a Reuters despatch: “Lawyers refused to appear in court, doctors were due to rally outside the health ministry, while a group of patients suffering from kidney cancer rallied outside the finance ministry which was occupied by striking officials.”
It is easy sometimes to exaggerate the impact of street protests. There is often a silent majority. But with Greece I am no longer so sure.
The impressive Finance Minister, Evangelos Venizelos, has warned of a vicious cycle, that the strikes are leading Greece’s creditors to doubt the country can meet its promises and so more austerity measures might be needed.
He tells it to the people how he sees it – that there is no alternative to going along with a plan drawn up the troika of the EU, the IMF and the ECB.
There are summits and then there are the streets. In the days ahead there will be much negotiating over how to save the eurozone but the Greek people – not just public sector unions – may simply upset the plan.
ANYhoo… It’s still “the political trilemma.”
[Europe is still sexy! – Ed] Of course it is.