A financial analyst says the EUs policy of protecting the Euro by imposing austerity is driving Europeans into poverty and unemployment at an alarming rate.
In the background of this, European countries increasingly suffer in their ability to cope with huge debt pressures. Standard and Poors has downgraded Cyprus to CCC+ saying the country is facing increased financial pressure, which means in this case the country is unable to pay its debts and or to negotiate better repayment deals. In Italy, protests have erupted over spending cuts to national healthcare. This, protesters believe, could even close down some hospitals. The economic crisis across Europe and particular the PIGS countries is severely distressing their populations as they see poverty increasing and jobs being cut through austerity.
Press TV has interviewed Mr. Robert Oulds, international finance expert, London about this issue. The following is an approximate transcription of the interview.
Press TV: Starting with Cyprus, Standard and Poor’s downgrading of the country to CCC+. First of all, tell us what that means in terms of a possible debt default as well is says it is now in junk territory?
Oulds: Yes, the debts in Cyprus are enormous. The problems with the Euro Zone now caught up with the island nation of Cyprus and really it’s in need of a bailout, which would be approaching its total economic output for one year – the debts are that severe.
But of course it has been unable to reach an agreement with those it owes money to, the financial institutions that have leant it money, to whom now it cannot afford to repay and as a result of not reaching this agreement the debts will continue to grow and the economy will continue to suffer.
What it means is that the debts will continue to grow in Cyprus and of course they just can’t affords to pay back the money and the economic outlook will continue to be very dark for Cyprus.
Press TV: The way the governments are tackling this issue – moving to Italy now – we’ve got cuts in the healthcare budget – protesters have come out – How do you think the problem can be resolved if the government is not going to bring about these austerity cuts? For instance, in the health care budget and the other services that the people see for themselves as vital.
Oulds: The policy of the European Union driven by Brussels and the European Central Bank, when it comes to countries like Italy and also other nations like Spain and Greece, their policy is to support the Euro instead of allowing for currency devaluation and have countries managing their own economies again; the European Union has forced austerity on those nations.
There has been budget cuts in areas of health and pensions and also education. And also there’s been a distinct strategy of actually trying to drive down wages to try and reintroduce competitiveness by reducing people’s pay in the public sector and it has also had an impact on the private sector.
But all that has done is of course meant there is less money to spend in the economy, less consumption, growing unemployment to very alarming levels and just more economic problems. It has turned a recession into a depression.
So the European Union’s economic policies have lowered wages and put people into poverty, made people unemployed and cut back essential services leaving many people to become deeply alarmed in those nations about their country’s future.