The irony for the EU, w
hich even its leaders now recognise must change course radically, is that it can’t. At least it can’t in its present structure without such dislocating changes as to be scarcely credible.
The central problem has been, and remains, the single currency. As long as countries, particularly on the southern periphery, remain locked within the eurozone interest rate and exchange rate and unable thereby to operate their own monetary policy, they have no option but to resort to austerity (i.e. cutting public expenditure, squeezing wages, letting unemployment soar) to regain competitiveness. But even that route is now blocked by these European election results. Even if that route were still open, it is clearly impossible for some eurozone countries under current conditions to raise their rate of growth sufficiently to prevent their indebtedness continuing to grow. Continue reading
The European policy of Chancellor Angela Merkel is coming increasingly under pressure. Not only European Commission President Manuel Barroso, but also Enrico Letta, recently asked by Italian President Giorgio Napolitano to form the new governnnent, have criticized her austerity policies, which have been dominant in Europe and are leading to disaster. Europe’s leaders have long been at a loss. The economic situation is worsening from month to month, and unemployment has reached a level which is increasingly undermining democratic structures.
The radical Front de Gauche (Left Front) is to launch a campaign for a referendum in France against the Fiscal Compact, known by critics as the Permanent Austerity Treaty.
