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Michael Werbowski

"New Europe" is on the Economic Edge

by Michael Werbowski

10 February 2009

The rising rage is palpable across Europe. Grumblings of discontent simmering beneath the surface for years have turned nasty, in places such as Greece last year. In 2009, these feelings persist and are intensifying by the day. The cold temperatures haven’t dampened the ire which has spread from the Mediterranean to the Balkans (Bulgaria) right up to the Baltic Sea and as far even as Iceland. Scuffles have broken out in the Baltic States (Lithuania and Latvia) over perceived corruption among officialdom, drastic government spending cuts, inflation, tax hikes topped off with the sudden downturn in the local economies due to the ongoing global market, and financial turmoil.

In the Lithuanian capital of Vilnius, thousands of enraged throngs gathered outside parliament chanting "thieves, thieves!". One of the three "Baltic tigers", which implemented draconian neo liberal inspired and IMF prescribed market reforms back in 2000 is now reeling from the impact of the global downturn and the consequences of rapid economic restructuring towards free market principles. Latvia’s economy is staying afloat with a 7.5 Billion Euro stand-by loan from the IMF ($9.8 Billion). The government envisages austerity measures which must be implemented as part of the "IMF’s loan package".

The Legacy of decades of Sachs’ "Shock Therapy"

Many of these economic transformations adopted earlier in the decade by the Baltic states were modeled on experiments done in eastern and central Europe known as "shock therapy". This economic dogma, devised by Harvard trained professor Jeffrey Sachs, heralded an era of growth or "boom times". But today, the entire region known as post communist and pro American "New Europe", whose bubble-like growth was fuelled by easy credit, investment from dubious sources, unbridled speculative and shady property deals, has evaporated due to the collapse of the global banking system. And the locals are hardly thrilled. This past week, cobblestones smashed shop windows and public buildings in the Baltic capitals in scenes which mimicked those seen in Athens recently.

Bulgaria, for its part, has been rocked by street protests as well. Last Thursday, professionals (doctors), police officers, farmers, and workers protested against poor pay and growing economic uncertainty and austerity. They blamed the center left (socialist) run government for its incompetence in dealing with the impact at home of the global recession. As the riots raged, a scientific study came out this week in the medical journal "The Lancet", in the UK, which attributed about 1 million early deaths in the former "Soviet bloc" in the 1990s to "the shock doctrine" (1) or frenzied paced mass privatisation of state owned industries, price deregulations accompanied by drastic spending cuts in the health and education, and curtailments in pension benefits.

"New Europe" on the Edge

Although "official" local media reports attempt to marginalise and demonise the protestors as dangerous hooded anarchists, leftist, militants, and other assorted riff raff, which some definitely are, for the most part, those willing to take to the streets in these icy mid winter temperatures appear to be simply ordinary citizens fed up with decades of corruption, nepotism and the pilfering of the public purse on a historical scale. When I sit in the local diner for lunch in Prague, I overhear discussions centered on increasing energy (gas, electricity) heating costs, and skyrocketing rents. Czech friends and acquaintances then tell me, in baleful tones, how they are fed up, as most people are, with rampant government corruption, incompetence and the widening chasm between the dwindling electorate’s means and the extravagant lifestyles of their elected leaders.

Run of the mill personal tales are of ordinary citizens having to pay bribes and grease the paws of greedy officials in various ministries from justice to social affairs to get a public servant to perform his or her designated task. The picture they paint is almost of a pre-republican, pre-revolutionary society. Somewhat like a modern day French monarchy under the "sun king" where the rulers in the Prague castle might say to the angry mobs protesting outside ministries about shrinking social spending and overpriced housing: "let them eat hamburgers" with contempt.

Britain the sick man of Europe?

Even in "old Europe" there are rumblings of disquiet as well. In relatively phlegmatic England, the citizenry has organised "sponstious gatherings" to protest the planned enlargement of Heathrow airport by building a third runway there. Although ostensibly this is an eco protest, the dramatic financial crisis in the UK’s banking sector coupled with the increasingly grim economic outlook for Englanders (facing foreclosures, and drowning in personal debt) might also be a contributing factor to stocking the ambers of anger against the government. The classic and predictable state’s response to these popular expressions of disaffection and disgust with the ruling elite is of course the use of force. Yet, in the context of the current global mess, state sponsored repression is likely only to fuel more rage and provoke more protests throughout Europe and perhaps world wide.

In "the post democratic era", the rage is not coming from the left or the right of the political spectrum, but seems to be sourced in the rapidly shrinking and endangered middle class (or the moderate mainstream voter) which is the mainstay and pillar of a free and democratic society. That pillar is crumbling fast, under the weight of rapidly rising unemployment, ballooning insurmountable debts and deficits, and astronomically expensive military expenditures in the G-8 member states (2).

The EU in state of paralysis

The European Union seems paralysed. Last year’s rejection of the institutional framework which governs the mammoth Brussels bureaucracy was rejected by Ireland. Further institutional reform has henceforth been at a standstill. The treaty’s arch foes led and personified by th eCzech president (who country ironically currently presides over the rotating EU presidency) is a fierce opponent to any further deepening or integrations of the 27 member state bloc. Furthermore, the EU seems powerless to impose its will on Russia to restore gas flows to its members’ clients. And the dispute between Ukraine and Russia drags on. Above all, the EU suffers from a chronic case of "enlargement fatigue". The most recent enlargement to several central European countries (Poland, Slovakia, Hungary, known as the big bang bank of 2004), may be its last large wave expansion eastwards. Meanwhile, the popular social movement fuelled by economic woes spreads like a wild fire in "borderless Europe".

Published in

(1) The title of journalists and activists Naomi Klein’s latest book.

(2) In the UK in 2008, government’s Comprehensive Spending Review (CSR) announced an increase in annual defence expenditure from ¬£32.6 billion in 2007-08 to ¬£36.9B in 2010-11

Michael Werbowski is a Prague based reporter and post graduate in post communist studies from the University of Leeds.

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