THE EU, once an economic haven of safe and principled private enterprise with workers rights, has come under renewed pressure in the recession. The most alarming casualties appear to be the Eastern European economies, previously seen as the bright stars of Europe. This in turn, could lead the rest of the EU on a slippery slope to financial purgatory.
While EU leaders commit to free trade values, segments of the European population riot, believing that those governments are still for the big business free traders who landed them in this mess. The latest episode in this quagmire is the consensus amongst EU leaders that bank bailouts and national industries should not hurt other EU members’ economies.
Ferenc Gyurcsany, Hungarian Prime Minister affirmed that “We should not allow a new ‘Iron Curtain’ to divide Europe. At the beginning of the Nineties we reunified Europe. Now it is another challenge – whether we can reunify in terms of finance.”
This statement, while well-meaning, begins to look increasingly bleak as the Eastern European countries, who received plentiful investment in their resources in their accession to the EU five years ago, including billions of loans from Western European banks, are now looking like continental basket cases.
In light of the recession, the IMF has had to bail out Hungary, Latvia and Ukraine. This economic struggle threatens to move westward with Austria, Greece, Italy and Ireland in the way, notably in the way due to their weakening public finances. Ireland, in common with countries like Bulgaria, has had its fair share of anti-government protests perceived towards the government’s role in the mismanagement of the economy – rage being about the government’s 3.5 billion euro injection into the Bank of Ireland and Allied Irish Banks.
Meanwhile, other EU countries are heading in different policy directions: France is acting in an increasingly protectionist manner by saving its domestic car making factories and closing ones based in the Czech Republic; and the British, Spanish and Italians are stuck in government deficits.
The EU has got a big economic bill on its table and someone will have to pay up soon.