March 14, 2016
The EU’s macroeconomic indicators for 2015 – the growth rate standing at 0.3 percent, the inflation rate at 0.2 percent – paint the picture of a continent severely affected by what economists call “secular stagnation“.
Secular stagnation is afflicting not only the EU but also Japan, and in the years ahead it will most probably end up engulfing the United States as well. Until recently, the only growth engines for the global economy were the BRICS countries. The slowdown in China and the economic woes experienced by Brazil and Russia have, however, reignited fears that the world economy is about to go off the rails, as the latest IMF warning clearly states.
The dire consequences of secular stagnation for Western economies could have been mitigated, if not reversed, by higher levels of public spending on infrastructure and on health and education systems. Instead, most EU countries under German leadership opted for the implementation of harsh and totally counterproductive austerity policies, which made matters worse.
Nowhere is the destruction of social fabric and political systems more evident than in the southern half of the EU. Greece is yet to register any signs of economic recovery after five years of the harshest austerity policies ever, while Portugal, Spain and Italy show only minor signs of recovery and stubbornly high levels of unemployment and social misery. Even Ireland, until recently deemed to have benefitted from austerity, has seen its political system unravel after the latest elections.
The danger in the political implosion of the above group of countries is real, as elections in 2015 have demonstrated. Neither Greece, nor Ireland, Portugal or Spain have returned traditional parties to power – a situation that has created political deadlock and instability, risking to make these countries ungovernable. Extremist and nationalist forces thrive in such an environment, further complicating matters for Brussels and for more stable (until now) northern members of the EU.
Weighing in on the dire political situation of southern EU members like Greece, Portugal and Spain is these states’ recent political history. Until the 1980s, they had been ruled by dictatorships and subsequently made enormous efforts to democratize their political systems in order to join the EU. Nowadays, the same union that bankrolled their valiant efforts during the last decades of the 20th century is imposing austerity policies which are in fact destroying both their societies and recently democratized political systems. For a majority of southern European citizens, the EU has failed to live up to their expectations and has become the problem, instead of the solution, to their plight.Florian Pantazi