Austerity feeding public discontent in Europe

(BRUSSELS) - Scenes of burning buildings and street battles in Athens offer a violent reflection of growing weariness among Europeans at the austerity-first philosophy sweeping Europe.

Last week alone, firefighters doused the streets of Brussels with water to protest pension reform, thousands of public workers took to the streets of Madrid and thousands more in Lisbon waved banners saying "no to impoverishment."

Strikes and demonstrations have taken place across Europe in recent months, from France to Italy and Britain, as people demand jobs and policies designed to boost growth in a continent hit by chronic unemployment and the looming spectre of recession.

More social action is planned in coming weeks, with the European Trade Union Confederation (ETUC) calling for EU-wide protests on February 29, on the eve of an EU summit, under the theme "Enough Is Enough."

"Greece is a now a highly combustible mix of economic collapse, political corruption, social discontent and human suffering," said Sony Kapoor, head of Re-Define, a Brussels economic think tank.

"While its situation is worse than that of other countries, it offers a glimpse of what may lie ahead for others if the EU does not change course," said Kapoor, who has argued for a shift to growth-enhancing economic policies in Europe.

But still hard-up governments are ploughing ahead with budget cuts, tax hikes and privatisation plans in a desperate bid to soothe markets and prevent the euro from collapsing under the weight of the Greek debt colossus.

Leaders of the 17-nation eurozone and eight other EU nations agreed last month to create a new fiscal pact requiring signatories to put balanced budgets into law, a measure critics say will put Europe in a permanent state of austerity.

The 25 governments will formally adopt the German-inspired pact at the March 1-2 summit, while Britain and the Czech Republic have chosen to stay out of it.

One British official termed the pact "the death of Keynesianism," while leading economists such as Nobel laurete Paul Krugman and billionaire financier George Soros have warned that Europe needed to shift away from austerity alone, or face the worst.

"We have chosen a policy that is going in the wrong direction," Daniel Cohn-Bendit, Green party leader in the European Parliament, told AFP. "We are increasing social injustice in a period of crisis."

Nearly 24 million people are unemployed in the European Union, a rate of nearly 10 percent.

But it is even worse among the young, with 22.1 percent of people under 25 looking for work in December.

Youth unemployment has soared to 48.7 percent in Spain and 47.2 percent in Greece, and in both nations around one in five people are unemployed.

Defying a general strike and protests, the Greek parliament adopted new cuts demanded by foreign creditors overnight, including a 22-percent minimum wage reduction, in return for a new 130-billion-euro ($172-billion) bailout.

EU Economic Affairs Commissioner Olli Rehn, whose auditors have scrutinised Greece's budget for two years now, acknowledged that "there have been tensions both in Greece and within its partners" in recent weeks.

He warned that it "will still take time and effort by the Greek society" to restore the conditions for growth and jobs.

But he insisted that the measures were needed to put an end to the "spiral of unsustainable public finances and to the loss of competitiveness" in Greece.

"Greek workers and citizens have been pushed to the limit of what is acceptable in terms of restrictions," said Bernadette Segol, general secretary of the ETUC.

"Successive austerity plans have plunged the country ever deeper into crisis. Labour law is being flouted and men and women are being crushed in the process," she said.