Monday, March 04, 2013

Eurocrats fear 'protest against entire system'

The game is up for eurozone countries Italy and Greece and a fatal blow to the single currency may not be far behind. A deadlock of different sorts has arrived in both countries and the political systems are locked into the impasse.

At the heart of the crisis are the austerity programmes imposed on the population from the outside, by the infamous Troika – the European Central Bank (ECB), European Union (EU) and the International Monetary Fund (IMF).

Ordinary people in both Italy and Greece have had enough. And their resistance has had an impact, not in the sense that austerity policies have been reversed – they haven’t – but in the inability of the political system to deliver what the Troika demands.

Troika officials are in Athens this morning, combing through the books and demanding more cuts before further tranches of the bail-out are transferred to Greece (from where they leave instantaneously for a creditor foreign bank or hedge fund).

Athens agreed to cut 150,000 public sector jobs by 2015 in return for financial support.  Under that plan, 25,000 employees were to be transferred this year to a "mobility" scheme, the first step towards redundancy.

With unemployment having reached a European record of 27%, the coalition government fears enforced redundancies will lead to total unrest. “The public sector has shrunk by 75,000 people in the last one and a half years," the finance minister, Yannis Stournaras, said. "There will be no layoffs."

With its GDP set to contract for a sixth straight year, unemployment is forecast to be more than 30% by the end of this year. Over 60% of those without work are under 25.
This cuts no ice with Troika monitors, with spokesman Thomas Wieser declaring: "All that was agreed in the bailout plan has must be implemented.”  

Across the sea to the west, near neighbour Italy is without a Pope, without a government and, from next month, will be without a president when Giorgio Napolitano stands down. Napolitano was in Berlin over the weekend, getting his marching orders from Chancellor Merkel, self-appointed guardian of the euro.

The line from Germany is that, whatever happens, the electorate must be kept away from the ballot box any time soon following last week’s general election. That resulted in the anti-establishment Five Star Movement founded by comedian Beppe Grillo picking up 26% of the vote and 163 MPs. They met for the first time yesterday and the only thing they agree on is not working with discredited political parties and leaders.

With the formation of a government ruled out, Napolitano is preparing to appoint another “technocratic” government of officials and so-called experts. Yet this is the regime led by banker Mario Monti that the Italian voters rejected overwhelmingly, with over 57% casting their ballots against anti-austerity parties.

This time Bank of Italy governor Ignazio Visco is front-runner to take over as premier.
This would be a slap in the face for ordinary Italians who have seen the economy dive into depression, with output having fallen by 10% from its peak, and where youth unemployment is at a staggering 37%.

What Napolitano is considering will effectively amount to a coup in a country where a corrupt, bureaucratic state is considered the problem by most people. “Nothing like this has ever happened before in the history of the Italian Republic. We are seeing a true crisis of the regime,” said Professor Luca Ricolfi from Turin University.

Grillo dismissed the ploy and repeated his vow to “bring down the old system” and added: “We’re not a political party, we’re a civic revolution. This country is in ruins with two trillion in debts and we have to rebuild it from scratch.”  

In Brussels, the old order is trembling at the prospect of Greece being thrown out of the euro and Italy – if Grillo had its way – deciding to quit the single currency. Giles Merritt from EU think-tank Friends of Europe said Brussels could handle old-style politicians like Silvia Berlusconi.

Grillo really worried them, he added, because it was a “protest against the entire system, and they are afraid it is spreading to other countries”. He’s not wrong there.

Paul Feldman
Communications editor

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