How will Europe look after the bailout?

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The governing political parties will view Ireland’s exit from the Troika bailout in December as the most significant legacy of their management of the economy over the last couple of turbulent years. The humiliation of losing our economic sovereignty was keenly felt, prompting a national anxiety that will probably take a good few years to shake off.

But beyond the politics of the moment of exit, what does it really mean? And will we notice any difference? Surely it’s cause for optimism, a moment of light at the end of this particularly long tunnel?

I certainly want to believe that’s the case, and it helps that the eurozone doesn’t appear to be constantly perched on the edge of oblivion, which seemed to be the case week in, week out for a very long time. Europe and Ireland appear to be pulling their economic boots out of the mud.

But then there is simply so much mud.

In an analysis of Europe’s current circumstances, a new study by the International Federation of Red Cross and Red Crescent Societies (IFRC), says that Europe is facing its worst humanitarian crisis in six decades as a result of its response to the economic crisis. It says that Europe is sinking into a protracted period of deepening poverty, mass unemployment, social exclusion, greater inequality, and collective despair, while the long term consequences of the European economic crisis remain unknown. 

Like I said, a lot of mud.

The Red Cross study focuses on the immense social impact of the economic crisis. In Greece and Spain adults with families are moving back in with their parents. Several generations living in single households with one breadwinner between them. It’s now a common sight to find formerly prosperous middle-class men and women sleeping rough in Milan, Italy’s financial capital.

During 2012, food aid was distributed to approximately 3.5 million Europeans in 22 countries, an increase of 75% compared to 2009. In the UK, people using food banks have started returning items they can’t afford to heat up. There’s a sharp increase in the number of working poor, people who need help with the basics of life because their income is insufficient. 

Employment is becoming more precarious, more insecure. Hundreds of thousands of middle class Europeans are spiralling into poverty and those already living in poverty are finding that the way back into mainstream society has become more difficult. More people are becoming poor, and the poor are getting poorer.

Unemployment remains the single biggest problem. Eleven million Europeans (out of 24m unemployed) have been out of work for more than a year, double the amount of five years ago. In a quarter of the countries surveyed, youth unemployment ranged from 33% to more than 60%. But just as socially damaging is the rate of unemployment among those aged 50-64, which has risen from 2.8 million to 4.6 million in the EU between 2008 and 2012.

The Red Cross analysis is stark. Irish communities and families will be familiar with much of what’s described here, although the study reveals that the crisis has made its presence felt beyond those countries, like ourselves, associated with the worst of the crisis. Workers and their families in rich countries, including Germany, Luxembourg and Denmark, are feeling the effects too. 

In or out of a bailout situation, the Europe-wide economic crisis has corroded everything it has touched.  

The study concludes, “Whilst other continents successfully reduce poverty, Europe adds to it. The long-term consequences of this crisis have yet to surface. The problems caused will be felt for decades even if the economy turns for the better in the near future. We wonder if we as a continent really understand what has hit us.”

Finding solidarity

Can Europe, and Ireland for that matter, find its way out of this morass? And how?

The general secretary of the TUC (Britain’s ICTU equivalent) was in Dublin last week, and while she acknowledged the grim outlook outlined by the Red Cross, Frances O’Grady reminded the audience that Europe has overcome very significant challenges in the past; in the aftermath of the Second World War, the fall of the Berlin Wall and EU enlargement to the East in the last decade. 

 “Each time our continent succeeded in rising to these challenges because we had the courage to take the high road. Because collectively we refused to walk away from the social solidarity that has brought the diverse peoples of Europe together,” she said.

After five years of damaging austerity, Frances argued that the European ‘social model,’ where public services and citizens and workers’ rights are valued at least as much as profit, must be reshaped for a new age and a new Europe. “We need a Europe run not for the bankers and bond market vigilantes, but for its citizens and workers. And that demands bold, radical, imaginative thinking.” 

It’s worth remembering that some of the more hawkish (and influential) advisers are still telling EU bodies to continue to tramp aggressively on a path to enforce “fiscal discipline and pro-market reforms to liberalise labour contracts, break trade union wage bargaining power and curb welfare and pensions” as the only road to ‘salvation’.

The road to salvation, they argue, involves the churning of more of that same relentless, unforgiving mud. But the collateral damage of escalating poverty and hardship doesn’t factor into that way of thinking. There is little in the way of historical evidence that this brutalist approach can ever work.

So as citizens, what hope have we? I’ll leave the last word to O’Grady. “From the trade union movement’s perspective, Europe needs to rediscover the values that served it so well not just during the long post-war boom, but also through challenges posed by the oil crisis and the economic counter-revolution of the 1980s. Now is not the time to reject European social democracy, but to reinvent it for a new age.”

Niall Shanahan

Communications officer