Monday, February 18, 2013

Should European citizens be happy about the ESM?

While the European people are suffering from the ongoing economic crisis, they look up to their leaders for a solution. They want to stop living in austerity, losing their jobs, seeing their incomes shrink. 

They want a better, secure future for them and their children. They wish to be able to make plans and provide for their families. But who listens to them? 

Europe's leaders seem to have lost touch with their citizens reality. People need real solutions and fast. We are forcing a whole generation of European young people into a dead end. So what is our leader's response to our needs? 

Well one of these "solutions" was the launching of the ESM (European Stability Mechanism). It is an international organization located in Luxembourg, which provides financial assistance to members of the euro-zone in financial difficulty. The ESM was established on 27 September 2012, and will function as a permanent firewall for the euro-zone with a maximum lending capacity of €500 billion. 

It will replace the two existing temporary EU funding programs: the European Financial Stability Facility (EFSF) and the European Financial Stabilization Mechanism (EFSM). All new bailout applications and deals for any euro-zone member state with a financial stability issue, will in principle from now on be covered by ESM, while the EFSF and EFSM will only continue to handle transfer and monitoring of the previously approved bailout loans for Ireland, Portugal and Greece.

In other words Greece, Ireland and Portugal can not have their debt weights lifted right now. Only Spain, Italy and any other country that hasn't received a bail out package so far, will immediately benefit from this. Greece will be able to join only if they fulfill the austerity plan and return to the markets. So there is no soothing for the poor Greek folk in their troubles, for the foreseeable future.

The very establishment of such organization clearly shows where Europe is heading. Our leaders' agenda is not finding solutions to our problems or proceeding with real reforms. In Greece for example the public has experienced only severe cuts and reduction of their incomes. Real reforms like those needed in the taxation system have never occurred.

Even the IMF has apologized to Greece, because apparently their estimations were wrong and the cuts imposed on the country too severe! So instead of helping the country, they have actually pushed it in deeper recession. But there is no schedule to reverse the cuts or lessen the burden for the Greek people. Was it a genuine mistake or is there an agenda behind it?

If the IMF that is part of the Troika can make such tragic "mistakes" that have a huge impact on the fortunes of European people, can they be trusted? Despite the huge sacrifices that the Greek, Irish, Portuguese and other nations had to make, the crisis is only getting worse and there is no end to this tunnel.

Currently Spain and Cyprus are in talks with the Troika for loans that will allegedly help them come out of their difficulties; or will they? If what happened to Greece is going to pass without any consequences for the people who made these mistakes, then is the Troika acting for the best interest of the European citizens?

We are witnessing the greatest financial experiment in the modern history of Europe. Austerity seems to be unavoidable for European states. It is clearly an agenda, not a solution. Our leaders are trying to change the way we work, the way we live, think of our future and our expectations. Europe is being redesigned for a new reality; but what will this new reality going to be?

That is confirmed by the very establishment of the ESM. Because every new country that wants to be part of this plan and avail of its benefits, it has to accept austerity and the regulations coming from the IMF. In that way our governments legitimize austerity all over Europe from now on!

While I totally understand and support that the euro-zone needs to be stabilized and the debt crisis contained, I do not think that the solution is imposing austerity on the weaker states. Our leaders seem to think that the only way to deal with the problem is by pleasing the creditors and giving full control to bankers and unelected officials. 

All the drastic plans in Europe to save our economies occur in the financial sector only, not in the political. Clearly that sector is easier to change, but in this way we are only finding temporary relief to our woes. Every suggested "solution" is an experiment that when fails, the European people have to deal with the consequences. 

So should I be happy that our leaders have agreed to establish the ESM? Well it provides easy access to loans and help to states in need, but with huge costs and conditions that come from people who made serious mistakes at least once, as the Greek case shows.

The only good thing about it I find,is that now our leaders will have overseers to forbid them making irresponsible financial choices. Once under the watchful eye of the Troika, there is little room for mistakes or excuses. Now if the Troika's solutions are of any real help, that is another issue. Ideally, I would not support for each state to surrender its economic sovereignty. But since we are all in the Common Market and use the same currency, there is not much of a choice.

As the crisis deepens, it will most likely drag more and more European states into it. They will have the reassurance of the ESM for support, thus austerity is here to stay in our continent. But what will happen if the states that lend want to lend no more? When a core of rich countries support all others, this will inevitably create frictions in the EU and that is in no way helping the European integration.

Instead of dealing with the shortfalls in each country's economy and Europe's as a whole, we put them on life support. How can this be of any benefit for the European economy? With ESM or without it, our continent is in deep trouble and it needs reforms.

So far we have seen only the kind of reforms who bring misery to the ordinary European population.  How can we built Europe on such policies that do not gain the support or approval of the people, they are not necessarily for their benefit, rather the benefit of the global economists and bankers?



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