The Scissors of Debt: Comments from Southern Europe
In lieu of an abstract, here is a brief excerpt of the content:

The Scissors of Debt:
Comments from Southern Europe

The debt crisis and austerity policies are hitting the societies of Europe’s Mediterranean periphery, particularly Portugal, Greece, and Spain, hard. With the onset of the economic crisis, a whole growth and development model based on low wages and property speculation has come crashing to the ground. But in addition, as a result of the adjustment measures implemented, the entire social model and the system of social rights won in previous decades have entered into crisis. The austerity measures affect welfare states that are particularly fragile compared with the European Union average. The Mediterranean countries, especially Portugal, Greece, and Spain, developed weak welfare states in comparison with the European Union as a whole. These countries established their welfare regimes later, in the 1970s, in an international context in which neoliberal policies were already gaining the upper hand as Keynesian policies were being abandoned (Rodríguez Cabrero 2004; Adelantado 2000). This does not mean, of course, that on a world-comparative scale the workers in Mediterranean Europe did not achieve a standard of social rights unheard of on other continents. But the future of these rights is now under threat from the austerity bulldozer.

Debt Crisis and Political Crisis

If during the 1980s, 1990s, and 2000s we saw the impact of foreign debt crisis on the people of the South through the systematic application of programs of structural adjustment and social cuts that were claimed to be necessary in order to deal with the payment of the debt, today it is the [End Page 49] Mediterranean periphery of Europe that is caught up in the whirlwind of the debt crisis.

As part of the socialization of banking debts, in the European Union (EU) as a whole, 1.7 trillion euros were allocated to rescuing private banking during the early period of the crisis (CADTM 2010). This aggravated the situation of public accounts, placing the countries of the European periphery in the eye of the hurricane and intensifying attacks on social rights and their reduction to a subaltern status within the EU. The very nature of the EU has made it particularly vulnerable to the crisis. First, monetary union and the creation of the eurozone were affected on the basis of heterogeneous economies with uneven productivity levels and no intention of correcting these divergences. Even before the outbreak of the crisis, these imbalances were clearly visible as the disparities between the growth rates of the different member states increased still further (Husson 2010). Prior to the onset of the crisis, the differences between the EU countries in terms of productive structure and position in the international economy led to a marked contrast between, on the one hand, a core of competitive countries, such as Germany, the Netherlands, and Austria, that built up balance of trade surpluses and, on the other, a group of less competitive countries with balance of trade deficits, such as the so-called PIGS (Portugal, Italy, Greece, and Spain) (Medialdea 2010). The euro has acted as an instrument limiting wages and public expenditure, depriving the countries with lower productivity levels of the room for maneuver allowed by currency devaluation. It has been used by Germany, with its strength in technology and productivity, to become the eurozone’s leading export power.

Second, the EU lacks the democratic mechanisms for making decisions on a continental scale. Its institutional architecture is a combination of an interstate logic, through unequal negotiations between its member states, and a suprastate logic, through the operation of the European institutions headed by the European Commission, control of which depends, in the last instance, on negotiations between the member states. The only European institution elected on the basis of representative-democratic mechanisms, the European Parliament, lacks any real power and is not at the center of the EU’s policy deliberation and policy-making process. This institutional architecture has proved to be extremely functional as far as the interests of the big business organizations and their pressure groups are concerned, as they have generally found the corridors of Brussels, far [End Page 50] removed from public scrutiny, highly conducive to their lobbying...