EUROPE in Rehab
| May 15,2012 10:44 am IST
Committing to and carrying out real structural reforms, managing citizens expectations, finding ways to grow the economy while keeping the spending on track is a BIG task but it has been done before in Europe and it looks like this is what the policy makers in Germany want from their southern European partners.
The question is are the folks on the streets in Southern Europe willing to sacrifice their living standard and livelihood for the greater good of the European Union in the long run or will Germany offer flexibility in the short term to ease the pain and change course? Well, we will have to wait and see.
There is no doubt that folks in Southern Europe benefitted the most from the European Union idea in the last decade without realizing that all the rise in their living standard and good times hasn't been paid for and is infact being subsidized by others specially in Germany. Yes, in the current environment it is easy to criticise Germany's stance on Austerity but I believe it is important to point out that there is a serious trust deficit among European partners so Europe has no choice but to go through the grind. It is no secret that policy makes in Germany are tempted to use this CRISIS as an opportunity to bring about far reaching changes across Europe and although I have always found myself siding with folks who disagreed with the severe austerity drive without any serious plan for growth there is no denying the fact that while Germany did carry out far reaching structural reforms during its reunification period and was referred to as The SICK man of Europe by the market its counterparts in southern Europe saw a big jump in their living standards and hence got busy partying. And now while most in Europe are struggling Germany is certainly ripping the rewards of the decisions made during the time of reunification which required west Germany to invest over Euro 1.3 trillion and also significant sacrifices were made by its population in terms of accepting lower wages, cut in pensions and benefits among others so may be folks in southern Europe need to do a REALITY CHECK and remember NOTHING IS FREE and good times dont last forever.
The protests and civil disobedience across Europe are probably some of the side effects of the REHAB process that Europe needs to go through in order to get back in shape and as we all know rehab is never a quick in and out procedure. It is a process that requires strong will and commitment and this will no doubt test the resolve of the Europeans but it must be said that a good rehab programs gets an ADDICT off the addiction slowly and this is done to manage the side effects better and ease the PAIN. So its probably time for Europe to consider a balanced approached through delivered a GROSTERITY (i.e. growth with smartly targeted cost cutting measures to bring down the deficit over a period of time) plan instead of its current front loaded severe austerity drive on all fronts.
A strong and sustainable Europe is in everyone's interest and the solution to the ongoing European CRISIS is a more integrated and competitive Europe on all fronts and not less of Europe. From the onset European Union was a flawed idea which allowed its members to get high on an addiction where everyone assumed their living standards will rise forever without realizing that they may be sleep walking into a disaster waiting to happen because the policy makers got blinded by the BLING BLING of Europe.
Greeks and others in Europe may not like austerity but going back on the European idea is simply not a good option because they are not prepared for the aftermath. Also there is no evidence to suggest that economies like Greece will benefit immensely by having a devalued currency in fact with a devalued currency it will take Greece more than 30 years to recover especially if all the far reaching structural reforms needed to revive the competitiveness of the country is not fully implemented. And also lets not forget the human cost that will come with exiting Euro. No doubt, a large population of Greece has seen the benefit of EUROPE so saying goodbye is probably not a viable option for them and the same applies for other countries in the Euro Zone area including of Ireland, Spain, Italy and Portugal among others.
Europe needs to come together with a strong resolve and will to get through the CRISIS. The aftermath of this CRISIS should be a strong, resolute, realistic, functional and more integrated Europe but this will depend on the policy decisions made by the European policy makers today. Europe is capable of finding its own FIX but this will require a strong political will and sacrifice. And its probably worth mentioning as analogy that you can make a football team with different nationalities, cultural background work together and also win trophies but only if all the team member share the same vested interested.
In short Europe has to be good and should work for all its member and not just some but this will require looking beyond national interests for the greater good of the Europe Union. Also the policy makers will need to come up with a balanced approached and folks on the street will have to get realistic about their expectations but I wonder If they are able to look beyond TODAY?
The problem is we live in a world where we expect instant results and changes without realising that this crisis didnt develop or happen overnight and fixing it will take time and also the FIX will come at a COST. The fate of the European Union is not at the mercy of the markets but its people and the ability of the policy makers to come together.