Image Hosted by
FACTDROP: Global Insight: Politics draws out accidental truth on austerity Europe


Global Insight: Politics draws out accidental truth on austerity Europe

Voter outrage sparks José Manuel Barroso’s concerns about eurozone belt-tightening

Πηγή: FT
By Peter Spiegel
April 24 2013

There is an old saw in US political circles that the definition of a Washington gaffe is accidentally telling the truth.

In an unscripted moment at one of the surfeit of panel debates that dominate Brussels’ daily rhythms, José Manuel Barroso this week appeared to do just that. He publicly stated what many European leaders had previously only acknowledged in private: the eurozone’s austerity-led crisis response has run smack into increasingly implacable voter outrage.

“I know that there are some technocratic advisers who tell us what the perfect model to respond to a situation is, but when we ask how we implement it, they say: ‘That is not my business,’” the European Commission president said in a not-so-subtle dig at his own staff. “We need to have a policy that is right. At the same time we need to have ... acceptance, political and social.”

His admission came at the end of a bad few weeks for austerity advocates. The International Monetary Fund has published new estimates showing recessions deepening in some of the most austerity-hit eurozone economies, such as Spain, Portugal and Greece. That coincided with the tarnishing of one of the most influential academic papers tying high government debt to economic stagnation.

There are also increasing signs that advocates for easing the austerity drive are gaining the upper hand in Brussels, with about a half dozen eurozone countries – including some in the so-called “core”, such as France and the Netherlands – seeking more time to hit tough EU-mandated deficit targets, Brussels’ most powerful tool in setting eurozone-wide fiscal policy.

But if it were just a deepening economic recession or academic one-upmanship, it is unlikely proponents of less belt-tightening would be able to have this much success in changing the tenor of the Brussels debate. After all, Europe’s recession has been deepening for well over a year with little policy change, and the occasionally vitriolic attacks between Keynesians and austerians have been a feature of the eurozone debate since the outset of the crisis.

What has changed is the issue Mr Barroso put his finger on: politics. In the wake of February’s Italian elections – where more than half the voters in the eurozone’s third-largest economy backed candidates running on overtly anti-EU and anti-austerity platforms – public acquiescence to the crisis’ policy response is evaporating.

Those close to the commission president insist there was nothing accidental about his remarks; for months he has been privately fretting about anti-EU sentiment provoked by eurozone economic policy, but kept his mouth shut for fear of rocking an already shaky boat. This week, he followed his political instincts and let loose.

Undoubtedly, the political destruction left in the crisis’ wake is already long and wide. Ireland’s Fianna Fáil, once the country’s presumptive ruling party, was decimated when it was forced into a €67.5bn bailout. Greece’s three-generation Papandreou dynasty was dismantled over the course of a weekend. Italy’s Silvio Berlusconi was openly ridiculed by his counterparts and summarily dismissed after a not-so-subtle nudge from Berlin and Brussels.

But the voter revolution, like the crisis itself, is now moving from the periphery to the core. Mario Monti, the Brussels-blessed technocratic prime minister who was crushed by the Italian electorate when he tried to win the job at the polls, warned shortly afterwards that other leaders would also be turfed out unless more was done to boost growth.

And there is no government now more at risk, and no country more central, than France, where François Hollande won the presidency last year promising to reverse the eurozone’s austerity-led response. Thus far, he has been singularly unsuccessful in that effort. His approval ratings have fallen below 30 per cent, near an all-time low for a president of the Fifth Republic.

German officials have made clear to eurozone counterparts that France has become their biggest concern, and may yet be the reason they allow an easing of austerity measures for now. They dare not risk a Franco-German rift just months ahead of a German national election.

But they also warn that at some point, and perhaps very soon, France’s day of reckoning will come. Then, the German push for austerity and economic reform could well meet French protesters at the barricades. If it comes to this, Mr Barroso’s accidental truth may instead prove an unsettling harbinger.

No comments:

Post a Comment