WHAT SPECTRE IS HAUNTING EUROPE?

Mass protests against austerity measures have spread from Central and Eastern Europe to Western Europe. Reports on rallies, demos and clashes with police in Spain, strikes by railway workers in France and airport workers in Britain, Italian protesters burning an effigy of Berlusconi, a march of blue- and white-collar workers in Belgium and pickets by Icelandic youth recall Soviet-era news reports of the decline of capitalism.

United Europe is protesting against reduced social spending, increases in the pension age and reduced benefits. In the West, analysts have divided into pessimists - who believe that Europe will face government crises, corruption and disintegration of its common economic space, and optimists - who say that the current crisis has revealed systemic defects such as false economic indices in Greece, financial aid wasted by Bulgaria and German mercenary interests. They believe Europe needed to be shocked into economic reform, to become stronger. The situation in Germany is fairly good, whereas the situation in Eastern Europe resembles the Great Depression. Protesters have clashed with police in Vilnius, Prague, Sofia and Budapest. The first time these countries have witnessed the use of tear gas and truncheons to disperse protesters since the Socialist era.

What has happened to democratic Europe, where a genuine market economy is backed by high living standards? Is there an alternative to the economic model of developed capitalism, will anti-crisis measures help? Will socioeconomic tension dismantle the EU? The spectre of communism is haunting Europe, said Marx, commenting on class conflict in Germany, Britain and many other countries. What spectre is haunting Europe now? 

Ogtay Akhverdiyev, Doctor of Economics, says the problem lies with the spoilt populations of European countries, who have been living beyond their means. It is expensive and difficult to maintain extremely high living standards. People within the EU had high wages, pensions, allowances etc. By mutual agreement, the budget deficits of EU member countries were not to exceed 3 per cent of GDP. In fact, the budget deficits of some countries were considerably in excess of this ceiling. Budget expenditure was very high, says Akhverdiyev.

This could not last long and European countries began reducing their expenditure, including on social welfare, he says. But their spoilt populations did not want their living standards to fall even by a fraction of one percent. The reductions in budgetary expenditure will not hit Europeans in their pockets as much as one might think watching news of mass protests. However, Europe has no alternative, says Akhverdiyev. As an example, he cites Greece, where lorry drivers want their wages to remain at pre-crisis levels although their work-load has reduced considerably due to falls in production. They do not care if there is any cargo to transport. A tendency to ensure high living standards - sometimes unwarrantably high - has deregulated the European economic system. Another problem is that the global economic crisis has not yet reached its lowest point. Germany's budget deficit is 8 percent. Unemployment has reached 12 percent in Germany, 20 percent in France and 15 percent in the USA, whereas the unemployment ceiling is 5 percent. "There is another example. 3 percent economic growth is reported in the USA. But analysis shows that this 3 percent comes from the military industry and there is no improvement in the consumer market. The crisis will last for at least 2-3 years. But, for sure, Europeans have a recipe for surviving these problems. I do not think any ordeals await Europe," says Akhverdiyev.

Zahid Mammadov, Doctor of Economics, shares the view that Europeans have simply become accustomed to high living standards. There are no social shocks there, he says. Free kindergartens and public schools are still functioning, benefits are paid etc. But immigrants from third countries started arriving in Europe in the 1960s. Good living conditions were created for them. As time passed, a new generation of immigrants stopped working and got used to living on allowances. Nowadays, many prefer to live at the state's expense, says the expert. Some East European countries are pursuing similar parasitic policies within the EU. In addition, some backward countries, such as Greece, Romania and Bulgaria were admitted to the EU, says Mammadov. This was not justifiable, as these countries are transition economies and do not meet the Lisbon criteria, he says. They do not have the conditions necessary for the development of a market economy. There were political rather than economic motives behind their admission to the EU. Western Europe was allocating huge funds to support the budgets of Poland, Bulgaria, Romania etc. It was subsidising the high living standards of Eastern Europeans and they want to preserve them. They believe that it is the EU's duty to cover budget expenditure.

In Mammadov's opinion, the biggest mistake is that while having a single currency, the EU does not have a single budgetary policy. Each member country has its own budget and makes decisions on its budget independently. Budgetary policies in countries ruled by left-wing parties differ from those in countries ruled by right-wing parties. Europe cannot avoid the adoption of a single fiscal policy, says the expert. 

Immigrants are also a problem. Europe bears the burden of social support to immigrants from northern Africa and Asia. A conflict of cultures is evident. Many immigrants have been living on allowances for decades, says Mammadov. He believes that trust in a socially-oriented western economy has not been undermined. "Austerity measures, the rational use of resources and wages and taxes control are preventive measures," he says. As for the mass protests, trade unions in many European countries are taking part to show solidarity. Europe will avoid political shocks.