The response of European left to the Euro crisis
INTRODUCTION
The overall objective of this report is to provide a clear and concise overview of the European Left position towards the Euro crisis. The argument put forward is that the European left wing disapproves with the centre-right neo-liberal austerity policies of the past 3-4 years. The left wing politicians argue that the austerity policies are not working and advocate for a change to growth aimed policies. To begin with, the first part of the report briefly outlines the impact of the Eurozone crisis. The next part focuses mainly on the European left response. The final part of the report concludes that the European left is unable to accumulate enough support to make the shift to growth aimed policies, therefore the outcome of this fight between the two political sides remains to be seen.
THE EURO CRISIS
The sovereign debt crisis, have exposed weaknesses in the conduct of economic policies and gaps in the design of EMU (Regling, 2012, p.1). Loss of competitiveness and large current account imbalances aggravated the European economies’ vulnerability to the financial crisis. This is particularly true for euro area countries, who cannot call upon the nominal exchange rate as an adjustment mechanism (Regling, 2012, p.1). This factor, combined with the large contingent liabilities related to financial rescues in several euro area Member States, revealed that a large number of countries had not done enough to generate public savings and lower debt levels prior to the crisis. Most euro area countries entered the crisis with a fiscal deficit which was not in line with the European fiscal framework (Regling, 2012, p.1).
THE EUROPEAN LEFT RESPONSE
Throughout the course of the euro crisis the voice of Left remained relatively overshadowed by the centre-right (Cohen, 2011). However, the years of slow growth and decreasing quality of life in the EU, demonstrated the limits of austerity driven centre-right policies. The Social Democratic Party and the Greens of the Germany argue that government’s national strategy has destabilized European markets and brought the Eurozone to brink of recession (Carnevali, 2012). The European left advocate a shift to growth aimed policies by promoting deeper political integration and solidarity and also introducing the “Eurobonds” (Juncker & Tremonti 2010). The left argue that the euro crisis is not the fault of the individual states and that the burden should be shared by all member states. The recent presidential elections of France brought a hope for the European left, as the newly elected socialist president Francois Holland promised to renegotiate the heavily criticised Fiscal Compact treaty. Mr. Hollande has put forward a socialist programme which proposes raising taxes on higher incomes, bigger tax on bank profits and promotes youth employment. The European Green Party called for European solidarity and a Marshall plan to reduce the debt burden and restart the Greek economy. The other few tasks European left promote are the cancellation of debt through either default or restructure (Husson, 2010, p.2). In a case of Greece, the emphasis is placed on the survival of the EMU and the idea to leave Eurozone is seen as an error by the European left. To sum up, the overall response to the Eurozone crisis of the left is to support the working class, by increasing tax for the rich and promoting policies which enable growth.
CONCLUSION
For the bigger part of the Eurozone crisis the governments of the European Union was mainly dominated by the political right (Economist, 2011). This left the European Left outside the game. However, the recent elections in several states (France, Lithuania) brought back the Left on the agenda. This can only indicate that the left is not dead and that there is a support for the Left policies. However, as for today, the European recovery is still driven by the centre-right neo-liberal policies. Whether there will be a shift to a growth aimed left policies are to be seen.
BIBLIOGRAPHY
Chaffin, J. (2012). European left sets sights on treaty. Financial Times. Retrieved December, 5th, from http://www.ft.com/cms/s/0/d294fcac-4841-11e1-b1b4-00144feabdc0.html#axzz2EsM7gLGD
Carnevali, E. (2012). The Euro Crisis and the Left. N+1. Retrieved, December, 5th, 2012 from http://nplusonemag.com/the-euro-crisis-and-the-left
Cohen, N. (2011). “Does the left have a voice in the euro crisis?”. The Guardian. Retrieved, December 5th, 2012 from http://www.guardian.co.uk/commentisfree/2011/nov/20/euro-eu-crisis-italy
European Green Party (2012). EGP Statement on Greece. Retrieved, December 5th, from http://europeangreens.eu/news/egp-statement-greece
The Economist. (2011). “European’s left left out”. The Economist. Retrieved, December, 5th, from http://www.economist.com/blogs/dailychart/2011/06/europes-left
Husson, M. (2010). A European strategy for the left. Social Resistance. Retrieved, December 5th, 2012 from http://hussonet.free.fr/srmh10.pdf
Regling, K. (2012). “Europe’s Response to the European Sovereign Debt Crisis”. Retrieved December, 5th, 2012, from http://www.efsf.europa.eu/attachments/20120608_speech%20regling_anders_chydenius_seminar_kokkola_en.pdf
Juncker J.C. & Tremonti J. (2010). “Eurobonds would end the crisis”. Financial Times. Retrieved, December 5th, 2012, from http://www.ft.com/cms/s/0/540d41c2-009f-11e0-aa29-00144feab49a.html#axzz1HjnL2SOR.
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Written by Edgaras Mascinskas
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