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When austerity bites

Publication Date : 08-10-2012


As austerity anger boils over in the streets of southern European capitals once again, government leaders there must be wondering what else they can do to both ease domestic pain and get their countries out of the euro zone crisis. What is clear is they have mostly failed to convince the people to accept the sacrifice they say is needed to cut budget deficits, reduce borrowing costs and turn the economy from recession to growth.

More than 200,000 demonstrators in Athens and thousands of protesters storming the Parliament in Madrid recently are only the most visible part of a smouldering cauldron of public resentment. The suffering is real, with scant optimism to lighten burdens as the crisis goes on interminably: rising unemployment, more cutbacks in services, increasingly heavy taxes, delayed retirement and so on. It is doubly depressing in that the latest round of measures is coming as economies in Europe, even in the industrious and productive north, are weakening.

The coalition government in Greece will find it hard to raise morale as it slashes 11.5 billion euros (US$15 billion) in spending over the next two years. Similarly, Spain is plunging deeper into an ugly mood as it struggles to meet European Union deficit reduction targets.

Some broad stability, or at least non-deterioration, appeared to have been achieved in recent months, but rising public disaffection and dwindling economic prospects may not only call into question the future of the euro zone, but also lead to wider political and social changes within and beyond crisis states.

Certainly, leaders will need to do a better job of selling the austerity imperative to an increasingly resistant and cynical electorate if there is a need for another belt-tightening round. In turn, voters who have grown dependent on state support in many spheres of activity will have to increasingly embrace self-reliance and allocate scant resources to the weakest members of society. For the sake of national and larger European efforts, there is an urgent need overall to close ranks.

Some believe modern European fears over the political and cultural implications of the euro are rooted in its historical legacy of two world wars, genocide and totalitarian rule. At the same time, post-war progressive politics based on peaceful resolutions and economic cooperation has opened a viable path, even if such politics is fraught with complexities.

However, all is not doom and gloom. As a Stanford Europe Centre commentator noted recently, Europeans' collective ability to deal with hard times in the last 70 years is "so enormous and so substantial" that Europe no doubt has what it takes to rise above the current crisis.


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