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Three weeks ago, Spain hit a record unemployment rate of 24.4 percent, and Greece’s stood at 21. 8 percent, making regional unemployment rise to an all time high. Aggregate demand has dropped in both countries: Greece is nearing its fifth consecutive year in a recession as Spain is plunging back into one, its last having been in 2009.
Who is the culprit for such structural pitfalls? Participants in these movements seem to be blaming the austerity measures instituted by the International Monetary Fund (IMF) and the European Central Bank (ECB) in order to alleviate the debt crisis that struck Europe in 2007.
The purpose of austerity measures is primarily to stabilize budgets, promote growth and increase the Euro’s confidence by cutting back on public spending. These austerity measures—supported by former French president Nicolas Sarkozy and German chancellor Angela Merkel—have further impoverished the nations’ youth and poorest, according to Economist Joseph Stiglitz. Omar Benderra, activist for the Franz Fanon Foundation, is of a similar opinion, and claims that those responsible for the financial crisis are putting the responsibility on the masses to finance the debt by increasing taxes while leaders of big banks are receiving tax cuts.
Believing that society’s most valuable asset, human capital, is being destroyed at the hands of these budget cut backs, Stiglitz has indicated that there are alternatives to this, such as taxing at the top and providing education at the bottom. “If the programme is well-designed […] the increase in GDP and employment can be significant,” he said.
Similar policies are being advocated by France’s newly elected Socialist Party president François Hollande, as he plans on lowering the retirement age from 62 to 60, as well as imposing a 75 percent tax bracket on those earning more than one million euros per year. Although France has been partially insulated from the economic woes of the Eurozone, it still suffers from a sinking economy and an unemployment rate of ten percent.
Hollande’s electoral victory further indicates a growing desire for a change in policy priority as Sarkozy, a strong advocate of austerity measures, is only the second incumbent in France’s history to have failed to gain re-election since the start of France’s Fifth Republic in 1958. France has not seen a Socialist Party president since 1988, under François Mitterrand.
Are we seeing a change in popular political discourse?
Benderra claims that if Hollande does institute any changes, it would be restricted. “France is tied to the Euro, a transnational currency, so there is only so much that it can do.” As most of the Eurozone is in crisis, and because of the Euro’s symbolic bind, Hollande has publicly declared that he stands in solidarity with Greece.
Hollande is supportive of Greece’s plight. IMF director Christine Lagarde does not share the same sympathy. Lagarde recently made a controversial statement in British newspaper The Guardian, in which she declared that the situation in Greece is a national problem, and that citizens should fulfill their civic responsibilities and pay their taxes. She illustrated her point by claiming that she is more concerned with Niger, where numerous children have to sit at the same table in school classes, showing no pity towards Greece.
Benderra says Greece and Germany have very different histories that have shaped their current economic status: Germany is a country that has been characterized by a fear of inflation ever since the 1920s. Also, most of their industry focuses on high grade products that prefer a confident currency—a result generated by austerity. Lastly, and more importantly, the European Central Bank is located in Frankfurt.
Greece’s trajectory, on the other hand, is marked by a long history of debt. Even prior to their entrance into the Euro, leaders knew Greece did not meet the necessary criteria and turned a blind eye. Now Lagarde is rejecting any sympathy toward Greece and the fact that Greece’s suicide rate is at an all-time high, with nearly 3,000 deaths related to the economic crisis.
“What Lagarde is saying here is that the Greek state must reimburse its debt, even if its population dies of hunger,” Benderra said in response to Lagarde’s Guardian statement. “The unacceptable aspect is her reference to Niger and its suffering population, as she fails to acknowledge that their current state is partially due to structural programs instituted by the IMF twenty years ago.”
Although the Eurozone, together with the IMF, has spent close to 150 billion euros on Greece since 2010, they are doing so with strict expectations in regards to debt repayment. Hollande has said that he would insist on rewriting the deal that 17 European Union countries signed earlier this year that cuts spending so that deficit is no more than three percent of national output.
“What Hollande is trying to do is shift the political economic discourse from austerity to growth,” says Florent Schaeffer, activist for French NGO Initiative Pour un Autre Monde (IPAM), an Alternatives member organization.
Hollande’s presidency is not the only sign of a need for a change in the political discourse in Europe. Shaeffer cites the ‘Blockupy’ protests in Frankfurt, Greece’s radical coalition of the left’s victory in parliamentary elections, as well as the Subversive Forum in Zagreb, Croatia as important indicators that initiatives to finding alternatives to austerity are gaining traction in Europe.
