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Economy

ORIGINAL FRENCH ARTICLE: L’austérité, l’austérité et toujours l’austérité

by Gaël De Santis

Austerity, Austerity, and Yet More Austerity

Translated Friday 11 June 2010, by Gene Zbikowski and reviewed by Gene Zbikowski

The EU finance ministers meeting finalizes the conditions for indebted governments to access funds, and prepares its Europe 2020 strategy: It is a model of neocon economics.

At each new EU meeting, they prepare another turn of the screw. Yesterday and today the Economic and Financial Affairs (ECOFIN) ministers of the 27 EU member countries have been meeting in Luxembourg in order to tighten up the budgetary rules.

Yesterday, the euro zone ministers were to approve the agreement on the financial stabilization mechanism that the diplomats arrived at on Friday, June 4. On May 9, the finance ministers had agreed on the fund’s objectives: to “aid” governments that encounter budgetary difficulties similar to those of Greece, without however having to go through lengthy negotiations. As a result, 750 billion euros could be ready. Of that amount, 250 billion euros come from International Monetary Fund loans, 60 billion euros from the European Commission and 440 billion euros borrowed on the financial markets, but guaranteed by the governments of the euro zone countries, plus Poland and Sweden.

To free up this “aid", national parliaments would not be consulted in order to prevent a possible “no” vote that would frighten the financial markets. It seems to be a done deal that the fund, in the form of a private company registered in Luxembourg, will borrow funds at market conditions. Once again, the European Union is delivering the people into the grips of the financial markets. The ministers have turned their backs on progressives, who are demanding that national governments be allowed to contract debts with the European Central Bank at the same conditions as private banks: at a 1% interest rate.

In addition, the ministers were to discuss a tightening of the stability pact, which constrains public finances. Notably, this involves an “economic government of the euro zone” whose shape is to be defined at a meeting of the European Council in Brussels on June 17 and 18.

On the agenda for tomorrow’s discussions, which concern all the EU governments, there is the Europe 2020 growth strategy, which takes over from the Lisbon one. According to the document prepared by the ECOFIN secretariat, the governments should end their economic relaunch measures by 2011, whereas there is still a bumpy road to travel to economic recovery.

As regards the labor market, a headlong neocon rush from the frying pan into the fire is the rule. In addition to budgetary austerity, wage austerity is recommended, in order to “reduce imbalances". To achieve this, the framework for wage negotiations is to be strict. The document favors taking “the local specificities of the labor market” and “the economic performances among the regions” into account in “fixing wages". This is nothing other than favoring the dismantling of the national framework for wage negotiations.

And yet, for the first time in its history, the EU agreed yesterday on objectives for the reduction of poverty. The Council of Social Affairs Ministers intends to pull 20 million people out of poverty by 2020. It remains an open question as to whether this goal is compatible with building the European Union that refuses to consider social dumping, some countries’ practice of offering generous tax breaks to companies, and the deregulation of public services.


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