The economic and financial situation in Europe is undoubtedly an issue of high interest in Latvia. The principal reason for such interest has little to do with the dramatic eruptions of public sentiment in Greece, the disputes between some Europeans and the Icelanders over the consequences deriving from the banking and financial crisis in Iceland or the various efforts in other European capitals to cope with deficits and deep budget cuts, but rather with Latvia’s own economic recession and the painful decisions that are being made in order to deal with the myriad of problems. Factual reports appear regularly in the Latvian media about the economic situation in other EU countries, but commentaries are rare. The sentiment in Latvia towards Greece and other EU member states facing serious economic and financial problems appears to be that of an interested observer, and clearly not that of a critic or an advisor. Latvians are too deeply aware of their own difficulties to pass judgement on others encountering similar difficulties. This is true both in the official and the public domain. At the same time, throughout this period of economic downturn, what has been stressed by many Latvians is the importance of EU solidarity and the Union’s readiness to come to assist those members having problems.
Bulgarian experts and economists believe that the single currency was the victim of speculative attacks and its weakness during the first half of the year should be assessed as a momentary phenomenon. According to Lachezar Bogdanov from “Industry Watch”, the instability of the Euro is a negative trend that should be tackled in time by the European Central Bank and the governments of the Eurozone. The rescue package for Greece provoked an intense debate among experts and financial observers in Bulgaria. Some independent experts have assessed the package as pouring money into a bankrupt economy that would further weaken the Euro, others stressed the fact that the plan has the potential of providing a long-term remedy in case Greece will be ready to apply the envisaged drastic financial measures. For the experts of Industry Watch, the Greek crisis uncovered public finance problems in Europe and has the potential to deteriorate Bulgaria’s fiscal position rapidly.
During the recent financial crisis, sound macroeconomic and financial management allowed Poland to emerge relatively unscathed. Indeed, Poland was the only economy in the EU to register positive economic growth in 2009 and expects to reach a growth rate of more than 2 percent in 2010. The recent crisis has laid bare some troubling weaknesses in Europe’s institutional framework. As Europe works to reshape its institutions now – making them stronger, more resilient, and better able to promote balanced and sustained growth – these weaknesses must be repaired. For Poland, after the painful early years of transition, economic growth took off, trade flourished, and stable institutions took root. Growing economic and financial ties with Western Europe accelerated this process and boosted foreign investment. All these produced a remarkable rise in living standards, with incomes beginning to converge toward Western European levels. This is the most important development: integration has improved the quality of people’s lives. The Polish government and economists are convinced that European institutions and mechanisms were able to provide some cushion from the crisis.
After the implementation of the institutional innovations included in the Treaty, the second big priority of the Spanish EU Presidency was coordinating economic policies so as to encourage recovery. However, the unprecedented Greek debt crisis dominated the semester and it ended up affecting Spain indirectly. It is true that crises usually provide an opportunity for rotating presidencies to enhance their leadership roles, but that was not the case this time. Spain’s troubled economic situation prevented this from happening, or at least blocked it. Spain’s fiscal situation was never nearly as serious as Greece’s. Still, that did not stop people from comparing the two countries, thus raising doubts about Spain’s neutrality and its authority for leading the debate on how to address the Greek problem or on how to reform European economic governance.
Nicoleta Athanasiadou, Costas Melakopides and Christos Xenophontos
Upon the conclusion of the European Council on 26 March 2010, Cypriot President Demetris Christofias hoped that the mechanism approved by the EU will not need to come into force, but confirmed that, if it did, then for every 10 billion Euros for Greece, Cyprus would need to contribute 20 million Euros. He declared that, given the close ties with Greece, Cyprus’ willingness to contribute could not be questioned despite its presently difficult economic situation. President Christofias added his hope that the EU-presidency would establish fiscal discipline that would prevent other countries from having to face what Greece went through. At that time, the overwhelming majority of Cyprus’ politicians, in tandem with the general public, were in favour of the creation of a solidarity policy on behalf of the EU member states towards Greece.
Luis Pais Antunes
The Greek situation and the possible consequences of the severe economic and financial crisis that Europe is facing are amongst the most discussed subjects in Portugal since our country’s accession to the European Union. Opinion makers, economic analysts and political parties spread their views on these topics on an almost daily basis. The main reason for this lies in the fact that, although there are substantial differences between the Greek and the Portuguese situation, it is common sense that the Portuguese economy is quite fragile and may be affected by the spill-over effects of financial markets’ instability in the Eurozone.
British public and political reactions to the crisis of the Eurozone arising from the indebtedness of the single currency’s member states have been almost uniformly negative. The crisis itself is widely seen as justifying Britain’s decision to remain outside the single currency and as definitely having the potential to destroy the Eurozone. The following analysis from the British perspective of the differing elements of the Eurozone’s crisis and its possible resolution must be set against a political context in which Britain is extremely unlikely to join the single European currency for many years to come, if ever; in which there is now little public support in the United Kingdom for British membership of the Euro; and in which what support there may have been a year ago for British membership of the Euro has been greatly reduced by the Eurozone’s continuing crisis.
Greek sovereign debt
The financial package regarding Greece, which was agreed on by the Euro countries at the European Council meeting on 25/26 March 2010, and their preparedness to support Greece if asked to do so was assessed positively. Prime Minister Fredrik Reinfeldt, when commenting on this agreement, also saw IMF participation in such a rescue operation as very positive, since the International Monetary Fund (IMF) has the expertise needed and is a long-term partner that can assist a country in need of vast and difficult reforms. He had problems, he said, in understanding why some countries were against this, not least since Iceland and Latvia, as well as other countries, are already using IMF programmes. Sweden, being outside the Euro area, had minimal influence on the package; nonetheless, the Prime Minister was quite content with the substance of this agreement.