EU Parliament: A catastrophic crisis management by European leaders

European Parliament. Plenary session, week 11, 2014 in Strasbourg. Preparations for the European Council meeting (20-21 March 2014). Council and Commission statements. (in the forefront) Jose Manuel Barroso, European Commission President has the floor (standing on the right) and Commissioner Olli Rehn EC Vice-President in charge of Economic and monetary affairs and the Euro. (EP Audiovisual Services 12/3/2014).

The European Parliament once more confirmed its reputation as the authentic channel transiting the social and the economic realities the European people have to endure to decision makers. Yesterday, the MEPs disagreed with the Commission President Manuel Barroso and Dimitrios Kourkoulas, the Greek deputy Foreign Minister speaking for the Council Presidency, that economic recovery was on the way. It was the Wednesday’s debate in view of the last EU summit of 20-21 March, ahead of the European elections.

Both Barroso and Kourkoulas stated that the worst is more or less behind and growth is here, albeit weak and uneven. However, the legislators pointed out that in the real economy juncture, as experienced by the vast majority of the productive apparatus which is the SMEs, nobody talks about growth but about bankruptcies. The MEPs also pointed out that the SMEs are starved of credits because the banks are not there for the rest of the economy.

SMEs and banks

The delay to create the Banking Union prolongs this situation and drives the SMEs to asphyxia. The multinationals and the big business do not depend on the banks for their financing and probably are happy to see their small competitors disappear. For years now the banks are cutting down their overall balance of loans to the real economy. This is of course an average. The situation is much worse in crisis hit countries like Italy, Spain, Greece, Portugal, Ireland and Cyprus.

The interventions by lead MEPs were very to the point. Joseph Daul (EPP, FR) pointed to the importance of SMEs as the driving force of Europe’s economy and warned: “Unless we have real tax, fiscal and social harmonisation, then we will continue to see SMEs going bankrupt.” Hannes Swoboda (S&D, AT) blamed the Council for its lack of courage, lack of vision and lack of guidance. The next summit would be “business as usual”, with “vague commitments, looking for the lowest common denominator”, he said. Guy Verhofstadt (ALDE, BE) said we were not in a period of growth but of economic stagnation. He stressed: “We shall not recover if we don’t create, first of all, the banking union”.

Catastrophic crisis management

The legislators had a lot to say about the catastrophic management of the financial crisis. It’s well known by now that the Eurozone banks have received in subsidies a round sum of €4.5 trillion of public money. This money, extracted from Eurozone’s poor taxpayers is used to write down their losses in unbelievable bets in all and every market all over the world.

Even in the bankruptcy of the City of Detroit a number of Eurozone banks were caught with a large exposure. As long as those bets produced a super-profit the bankers pocketed it. When the bets went bust the governments ran to make it up to banks. Gabi Zimmer (GUE/NGL, DE) condemned the EU’s failed crisis management. She said the brutal public spending cuts in EU countries “put the burden on those who have nothing to do with causing the crisis”.

The worst hit

The MEPs extended their criticism on the wider economic strategy followed by the EU and its core member states. Globalisation was at the center of it. Andrew Henry William Brons (NI, UK), said that the European Semester reforms would mean that “a relatively high-wage economy or group of economies embracing the ideology of globalism and the process of globalisation must drive down wages to compete with the emerging economies”. The South of Eurozone has already experienced this process. Wages and salaries in Greece, Spain and Portugal are now reduced to developing world levels.

In the worst hit of them all, Greece, a lot of people work only for their social security contributions. Workers nearing the retirement age have no prospects at all, if they lose their job. As a result, they accept to continue working only for their social security payments for two or three years in order to reach retirement. With overall unemployment at 28% and 60% of youths without a job the social horizon is quite dark.

Last but not least the MEPs strongly criticized the next European Summit of the 28 EU leaders, by predicting it will be another ‘zero sum game’. The results of the meeting will be “business as usual”, with “vague commitments, looking for the lowest common denominator”, Hannes Swoboda (S&D, AT) stressed.

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