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Image header Agence Europe
Europe Daily Bulletin No. 10348
A LOOK BEHIND THE NEWS / A look behind the news, by ferdinando riccardi

Europe has to face up to its serious financial and budget problems

No one dares admit what the consequences of this issue might be. Europe is now poor. We know it but we do not dare to speak about it openly or at least one does not dare admit what the consequences of this situation could be. The EU is experiencing serious budget problems as a whole and almost all member states are obliged to cut their spending. The Community budget is subject to an austerity regime (this has been explicitly requested by five governments for several months now) and the majority of member states have to tackle budget deficits, which compel them to make certain and sometimes extensive cuts in spending. Any abundance of resources and sumptuous monetary reserves are to be found elsewhere. Nonetheless, Europe is still the focus of appeals and it is Europe that is being demanded to significantly increase funding and take responsibility for spending which, logically, should be assumed by other players. How many EU countries are currently sacrificing different fields of action which, despite the protests, involve the cultural and education fields? We have witnessed the somersaults that have occurred due to the austerity programmes and the different reactions from the respective sectors affected. It should not be forgotten that the primary obligation of any country should be towards its citizens and the EU, as a whole, must safeguard its common policies.

Support for justified and efficient external spending. It is still obvious that in the context indicated above, Europe and its member states have to meet their external commitments but at the same time they must ensure that these are justified and effective. They must be justified in principle and they must produce effective results. A number of controversial cases are indicated below.

Associated African countries are quite rightly under no obligation to Europe and are now entirely free to make their own economic and political choices. The European attempt to establish new trade relations in compliance with GATT rules has largely floundered. The facts bear this out: several African countries have significantly increased their ties with China, whether this is for exploitation of their natural resources or to purchase goods, and they consider that they do not have to be accountable to Europe at all in this respect. Scandals sometimes break out indicating that EU funding has not been used appropriately or that the heads of beneficiary countries have appropriated this funding for their own personal use. The EU, however, does not have the right to exercise controls. It is a complex question because it is normal that sovereign countries are eager to protect their independence and it remains to be seen to what extent obligations from the other side, namely the EU, remain unchanged in the financial or trade arenas.

In my opinion, the new trade regime was both badly devised and negotiated, and the EU bears a number of responsibilities for this. In order to respect GATT rules, EU “preferences” in favour of products from associated countries have been largely removed and replaced by “partnership agreements” between the EU and the different regions of Africa. Nonetheless, the Africans pointed out that they were not equipped to compete with Europe and other third countries. Mutual recrimination dominates and proves that the system is unable to work. Traditional African farming has been ruined and certain non-governmental organisations (NGOs) have vigorously and quite rightly protested against the setup. If the EU does not have any right of scrutiny and if it has been massively replaced by other players on the African markets, why should it continue to respect commitments with countries that often do not acknowledge it with any role at all apart from providing them with subsidies? Obviously, this comment does not apply to humanitarian intervention when responding to different disaster situations. In this domain, the EU continues to be the world's most generous donor.

Another anomaly: the big Arab oil-producing countries have been doing a lot of shopping in Europe and have bought up palaces, hotels, works of art and football teams. Why should Europe be responsible for bearing the main brunt of the costs to the Palestinian Authority alone, including payments and pensions to its personnel? It is true that at the same time, some top-flight non-EU countries have created the impression that they perfectly understand the financial situation in Europe: China has bought Greek treasury bonds, Brazil has announced that it will do likewise with bonds from the Portuguese Treasury.

Indispensable and justified spending. The previous comments are all the more justified given that the EU is having to deal with the escalating costs of floods of refugees arriving on its shores. Europe is assuming these increasing costs no matter how great they are. Given the size of Lampedusa, bestowed upon it by nature, and the narrow and limited installations set up in Greece, why, according to a famous quotation, should Europe have to bear the suffering of the whole world upon his shoulders? Yet Europe is getting organised and this is not an area in which it will be cutting back. Cutbacks will be inevitable in other domains, however. (F.R./transl.fl)

 

Contents

A LOOK BEHIND THE NEWS
THE DAY IN POLITICS
GENERAL NEWS