International

SP Member of Parliament Ewout Irrgang, who will stand down at the coming election, participated today in a debate on the eurocrisis and expressed strong criticisms of the current approach to a crisis which is increasingly out of control. Irrgang, an economist, argued that the European austerity policies are not working, because the lowering of wages and social payments in almost all European countries is leading to shrinking economies. The Greek economy has experienced years of such negative growth, and has shrunk since the outbreak of the crisis by some 20%. This means that the level of debt as a proportion of Gross Domestic Product (GDP) has increased, further reducing the chances of a full repayment of debts.

In Irrgang’s view other solution must be sought: ‘The northern EU member states should stimulate their economies, which would lead not only to increased spending at home, but also to higher exports from the southern European countries. In addition Greece’s debts should have been rescheduled at an earlier stage, with a bigger contribution from the banks. Finally, Greeks on higher-and middle incomes should have to pay more in taxes. The country is tens of billions out of pocket as a consequence of large-scale tax evasion.’

In the debate Irrgang argued for a more substantial role for the European Central Bank, which in his view should be buying up bonds from both southern- and northern European countries. Unlike the emergency fund – the European Stability Mechanism (ESM) – the ECB has it within its power to drive down the interest rates on loans to these countries to acceptable levels. Irrgang does not see the ECB as the solution to the Eurocrisis, but believes it can represent part of such a solution. The SP is not alone in its call on the ECB to accept a greater role. The OECD, the IMF and leading economists have all argued in favour of this.