EUROPE AGAINST THE "UNREAL WORLD"

The crisis in Europe, which began two years ago, continues to spread to more countries. Despite the anti-crisis efforts of the European Commission and other EU institutions, major European economies, particularly Spain, are in danger of default after Greece, Ireland and Portugal. The situation clearly leaves Europe face-to-face with the question of the prospects of strategic development, which, given the deterioration in the living standards of most Europeans, is acquiring pronounced social content.

We must turn to patriotism in this period

The international rating agency Moody's assessed the credit rating of the EU as "negative". Thus, it warns the EU that it may lose the highest credit rating "Aaa" in the foreseeable future. The deterioration in the outlook is due to the agency's fears about the budget situation in Germany, France, the Netherlands and the UK. These countries get 45 per cent of the total budget of the EU together.

One of the causes of the significant decline in the ratings of several European countries is the indecision of European leaders with regard to support for the European Central Bank's (ECB) programme to buy back the bonds of debtor states. At the same time, more and more countries, especially Spain, which draws increasing attention in the context of the financial crisis, are coming closer to the critical point. This country, which is currently in recession and had the rating "Aaa" in 2001-2010, has now been assigned the lowest of the investment ratings "Baa3". The national debt of Spain is skyrocketing. Experts suggest that funds of the European Stabilization Fund will be used to buy Spanish debt. Spanish Finance Minister Luis de Guindos said that if the ECB helps bring down the interest rates on the bonds for his country, it will succeed in reducing government spending.

Meanwhile, two large economies at once - France and Italy - announced a decline in GDP. According to the Italian statistical office Istat, compared to the first quarter, the country's GDP fell by 0.8 per cent in the second quarter. The annual decline in Italy's GDP is 2.6 per cent. The Italian economy has been in recession since the middle of last year and, according to all forecasts, GDP will also decline in the fourth quarter.

Unlike Italy, France avoided the recession. But its GDP has been stagnating for two consecutive quarters. Another negative indicator is that unemployment in France has crossed the psychological mark of 10 per cent.

In general, growing unemployment has been typical for most European countries over the last three or four years. Portugal (15 per cent), Greece (21 per cent) and Spain (23.6 per cent) have the highest rates. France is approaching these marks due to the fact that, despite the social legislation, companies are dismissing employees because of deteriorating economic conditions more and more often.

French President Francois Hollande acknowledged that the situation in the country is not the most favourable at the moment. However, he said, measures will be taken to address it, in particular, a programme is being developed to increase the competitiveness of France, and a year later, as the president assured the French people, the unemployment rate in the country will be lowered. Hollande also reiterated his decision to take away three quarters of the incomes of rich Frenchmen through a substantial tax increase. The issue is about income in the amount of one million euros or more per year. Ordinary voters approved of the initiative by the socialist president, who, however, presents his ongoing leftist course as patriotic. Thus, opposing the desire of France's richest man - LVMH head Bernard Arnault - to obtain Belgian citizenship in order to avoid paying taxes in France, Francois Hollande said: "He must think about what it means to change citizenship, because we are proud to be French. We must turn to patriotism in this period."

Clearly, one of the key aspects of the moment is that the population of European countries is increasingly demanding compliance with the principles of social justice in the economic crisis. The social aspect is most clearly seen in Greece - the country that is most affected by the global financial crisis.

The standard of living in Greece has fallen by 35 per cent in recent years. If Greece is expelled from the euro zone, it will fall by another 70 per cent. Greece's GDP has fallen by almost 20 per cent, and unemployment has officially reached 23 per cent.

In order to reduce government spending, Athens plans to take a number of measures. Thus, Greek President Karolos Papoulias intends to cut his own salary and pension. The head of state also proposes reducing the pensions of all the former presidents of Greece, which, according to the Ministry of Finance, will save about 350,000 euros a year for the state budget. At the same time, Prime Minister Antonis Samaras abolished all special commissions and secretariats at the government and imposed a maximum restriction on the use of official cars by ministers. In addition, Greece declared its readiness to sell or lease uninhabited islands as part of the privatization programme, through which the government hopes to obtain funds to fight the crisis. At the same time, according to Samaras, the government will not "get rid" of the islands "on the cheap". The matter is about the possible conversion of uninhabited areas into facilities that will generate income.

In addition, trying to get extra income, the Greek government has included 19 state-owned companies, including 7 companies and 12 seaports, in the privatization programme. In particular, the government will withdraw its capital from the oil company Hellenic Petroleum and the electricity group DEI. The government will also privatize the state postal service ELTA and the lottery corporation OPAP. The authorities will also put such large ports as Thessaloniki, Volos, Alexandroupoli, Heraklion and Piraeus on sale.

But the real hope of Athens remains the same - the successful outcome of the negotiations with the EU, IMF and ECB on continuing financial support for Greece. The troika of lenders is demanding that the Greek leadership implement structural reforms, including a cut in public sector wages and liberalization of the labour market. According to the president of the European Union, Herman van Rompuy, the EU will continue to provide assistance to Greece only if Athens demonstrates the positive results of the reforms. The Greek government, for its part, undertook to reduce social benefits and pension payments and save money by cutting staff and the salaries of civil servants. These measures led to a new wave of mass strikes in Greece.

Peoples should have their say

Against the background of the protests in Greece and other European nations affected by the grave crisis against the government's austerity measures, the question arises of whether the EU, IMF and ECB-backed anti-crisis measures will succeed, if the majority of people disagree with them, to say the least. It is difficult to give a precise answer to this question, without understanding the causes of the failure of the anti-crisis policy in EU countries.

According to the head of the Paris School of Social Sciences, Jacques Sapir, the problem stems from the fact that European leaders have convinced each other that the crisis is allegedly linked to the debt that causes quite real problems with liquidity. Therefore, a solution is offered: get out of debt through austerity measures. However, according to Sapir, the policy of austerity provokes a sharp decline in fiscal revenues, which can be seen in Greece, Spain and Italy, which increase both the deficit and the debt. The sharp decline in wage costs leads to the fact that some countries such as Greece and Portugal are losing their entire branches of industry.

Sapir sees one possible way to overcome the crisis in the coordinated dissolution of the eurozone. "Eurozone countries must agree to suspend the euro and return to national currencies. This would allow for devaluation, which in fact is the easiest, fastest and least painful way to reduce wage costs," the well-known French expert believes. A coordinated decision to suspend the single currency, according to Sapir, "would make it possible to present this decision as a decision of Europe, not as a return to nationalist policies, and to avoid the gradual and disorderly dissolution of the eurozone, which is now becoming more and more realistic. We already see that nervousness related to identity caused by rising unemployment and general impoverishment is developing in many countries. The euro is killing Europe."

The last theses clearly indicate the ideological component of the European crisis. According to the influential Swiss publication Le Temps, "the euro crisis reflects the futility of European policy". However, according to analysts of the country which is not a member of the European Union, it is necessary to move towards greater integration, which will make it possible to "find resources through which the eurozone could resist such a serious problem as the ghostly world built by investment banks and funds speculating on the real economy of goods and services".

Le Temps says that "only the deepening of integration can provide the opportunity to save the single currency without having to take an infinite number of measures of assistance, because of which the solidarity of the European peoples will be subjected to severe tests in the long-term ... Peoples should have their say. If the results of the referendum are favourable, the peoples of the EU will rediscover at the European level their sovereignty stolen by the markets."

At the same time, among the proponents of European public opinion, there are those who believe that the lesser of two evils is to minimize the integration project across Europe. "The only possible alternative to enhance solidarity today would be the establishment of a smaller area around France and Germany," the French edition Ouest-France says, for example.

In any case, the European politicians will have to make a fundamental and fateful choice between the various options to tackle the crisis, among which the dilemma of "saving the eurozone or abandoning it" is one of the simplest. Undoubtedly, as the crisis predicted by experts worsens, much more complex, synthetic options will be offered, and the prospect of their implementation will depend on the power of the consolidated opinion of the European countries and, most importantly, on support and approval from the majority of the European population, i.e. a factor which, taking into account the social outbursts in Greece, Spain, France and other countries of the continent, cannot be ignored in the process of implementing various anti-crisis programmes.