International

It is not my intention to scare the living daylights out of anyone, but for all the soothing words of Van Rompuy, Draghi and Barroso, the eurozone is still far from stable.

Everything’s going awry in southern Europe, and meanwhile the EU member state government leaders dance insouciantly – dance on the volcano, because any moment could see a new explosion. The flaws in the eurozone remain: unequal economies which are unable to grow quickly enough towards each other. Southern Europe still lacks the possibilities offered by having one’s own currency, which could be devalued. Without such an instrument the chances of success for any of the weaker eurozone countries are minimal.

Just a few reports from the last few days: in Portugal more than 1.5 million people demonstrated against the new tax increases introduced by the government. ‘Troika out!’ was the cry, shouted in the knowledge that these were imposed by that body, which comprises the European Central Bank, the European Commission, and the International Monetary Fund. To put this into context, Portugal has fewer than 11 million inhabitants, so this was a mass protest of the people. In Italy former Prime Minister Mario Monti has been punished for the same kind of policies, also imposed by Brussels, though with something more like kid gloves, because Italy has as yet not had a bail-out. Berlusconi, and the eurosceptic tendency led by comedian Beppo Grillo did best. The national debt has in the meantime risen to 126% of GDP, a total of €2,000 billion. Hardly a stable situation. Grillo expects the Italian state to be bankrupt inside six months. As for Greece, I can be brief: there too people are protesting in growing numbers, sadly with the nasty side-effect of rising fascism. Yesterday property management firm Russell Investments acknowledged that Greece is no longer a developed country but listed it – euphemistically – as an emerging economy. The eurozone’s first developing country.

This year sees elections in Germany and Angela Merkel doesn’t want any trouble till they’re out of the way. No new aid packages, no crises. The Brussels community goes politely along with this. The government leaders go sweetly on their way and issue well-regulated calming declarations. Next year everything will be better. These predictions are, however, largely based on the expectation that world trade will pick up in 2014. Governments forget for convenience sake that last week saw the US abandon its policy of stimulating the economy in favour of one based on rigid austerity, a result of the fact that Republicans and Democrats can’t agree on the budget. So no push to world trade can be expected from the US, while the same goes for China, where growth has also slowed.

Even more important is the fact that governments have closed their eyes and ears to developments closer to home. Southern Europe is in flames, but the leaders of member state governments ignore the fire. How long can this go on?