THE bad news has come rippling across Europe like an icy, evil wind. Each day brings tidings of fresh closures, losses, job freezes and redundancies. As the recession bites harder and deeper into Europes economies, the population has become increasingly desperate, clutching at straws, looking for scapegoats for their falling fortunes and cloudy futures.
In Spain, a country with just 39 million people, over 200,000 jobs have been lost in a single month. In Iceland, the economy literally collapsed, like an over-risen souffle, and a desperate and angered population forced its leaders to resign. In Greece, students have been on the rampage protesting against a non-existent professional future, while in France, Italy, Germany, Portugal and Britain there have been massive street protests.
Not a single sector has been spared the downturn. Banks, airlines, steel and automobile giants, defence and media empires, hotel chains, electronic and computer manufacturers, are all shedding workers like layers of clothing on a hot day.
A year ago, when Lakshmi Mittal announced plans to shut down the Arcelor Mittal steel plant in Gandrange in north-eastern France, President Nicolas Sarkozy visited the site and promised the government would invest in the company and save over a thousand jobs. The workers marked the fourth anniversary of the company in February by smashing up Mittals office. They also held a mock funeral service with a granite tombstone erected to Sarkozys empty promises. Here lie Sarkozys unkept promises reads the inscription on the stone.
When I think of Lakshmi Mittals lavish lifestyle, of his daughters 80-million wedding, and I compare that to what I earn, a mere 1,700 a month after 25 years of labour, my blood boils. But when I think of our President, who came here making false promises, I want to vomit, says 43-year-old steelworker Alain.
His otherwise handsome, open face is furrowed with worry lines. Son of a smelter, and father of four, Alain more or less inherited his job at the steel plant when he joined up as an apprentice at the age of 18. When I signed up it was still called Usinor Sacilor. I have seen many changes in management and style. But nothing as brutal, as crude, as the Mittal management, he says.
The news is very, very bad. Steel is my world, a wonderful fraternity of workers, which is now threatened. I was very young to understand the first oil shock of 1974, but it was like an earthquake in our house, the first time my father was laid off. I do not want my children to suffer the same insecurity I lived through as a child in 1974. Today, I am ready to fight for my rights and for my family, he says.
With losses piling up and companies across the board cutting back jobs, Alain fears for his future and that of his children. We are drowning. If two million of us took to the streets to protest our Presidents anti-worker and pro-capitalist policies, despite his social blah-blah, surely that means something, he says, his forehead furrowing.
With violent demonstrations in Frances Caribbean territories of Guadeloupe and Martinique and a painful and protracted face-off between employers and trade unions that appear to be going nowhere, France has entered a phase of large-scale social unrest.
Sarkozys 26 billion stimulus package has failed to make even the smallest dent in his countrys economic fortunes. The foreign trade deficit rose by a whacking 37 per cent in 2008 from 40.2 billion to 55.7 billion while growth plummeted to its lowest in over 20 years. Unemployment rose to almost 8 per cent.
France is not the hardest hit. Three years ago Spain, along with Ireland, was one of the fastest growing economies in Europe. Now the downturn is accelerating with equal speed and it looks like boom-to-bust in one fall sweep. The Irish tiger has been reduced to a mewling kitten and Spain has been brought to its knees by a huge real estate bust that has made a massive hole in its finances and left several hundred thousand people destitute.
In Spain, the unemployment rate has gone up by 75 per cent in one year to touch 14.3 per cent of the population; over three million Spaniards are out of work today. Economists predict that this figure could go up dramatically in the next six months to touch 20 per cent of the countrys active population.
The city of Zaragoza, for instance, was all set to host the international expo fair. It represented the new, young, dynamic, gung-ho Spain led by its dimpled, youthful Prime Minister Jose Luis Rodriguez Zapatero. A 15-year-long period of steady, unparalleled growth had given Spain new hopes, dreams and daring. It was an optimistic nation that decided to legalise gay marriage and re-examine the countrys murky past under General Francisco Franco.
Now Zaragoza looks like a huge unfinished building site. The new bridge over the Erbo river, designed by Pritzker-prize-winning architect Zaha Hadid, has been cordoned off and hundreds of workers have been made redundant. Construction, which in the boom years accounted for as much as 15 per cent of Spains gross domestic product (GDP), could well fall to below 5 per cent this year. Pedro Morales sold real estate there for three years. The future looked so bright he contracted a housing loan, bought himself a spanking new car and moved his mother from Madrid. Now, his dream is in ruins and they are back in his mothers small, cluttered flat. I have sold my car. My flat in Zaragoza is gone and my savings have evaporated. At 36, I am starting again from scratch and we are trying to live on my widowed mothers pension, he says.
The fall in GDP has been the steepest in Germany where the gross national product (GNP) fell by 2.1 per cent, the sharpest dip since the country was reunified in 1990. Italy, which has had zero growth for over five years, has seen its worst slump since 1980 with a dip in GDP of 1.8 per cent. Portugals 2 per cent GDP drop will probably sound the death knell for the countrys socialist government.
The economic uncertainty spawned by the sub-prime crisis, which has now become a full-fledged global recession, has woken up many dormant nationalistic and protectionist demons. In Italy, there has been a huge backlash against immigrants who are being held responsible for the joblessness among Italian youth. A young Indian migrant, Navtej Singh, was recently punched and kicked and then set on fire by three young unemployed men as he lay sleeping on a bench at a railway station near Rome.
Britain saw ugly, wildcat strikes at a plant belonging to the petroleum giant Total when the management tried to hire Italian and Portuguese workers. British jobs for British workers, went the strikers slogan. They were able to cut a deal with the management that reserved 50 per cent of the jobs at the plant for British workers, embarrassing Prime Minister Gordon Brown, who is a vociferous defender of free markets and free trade.
Under European Union (EU) rules such reservation is illegal. The 27-nation area is one big single market which allows for free movement of goods and to a somewhat limited extent people.
Britain is not the only country to fall to the temptation of job reservation and protectionism. Sarkozy announced a 6 billion loan package for the countrys two automobile giants, Renault and Peugeot-Citroen. The caveat was that the companies would not de-localise to cheaper European economies such as the Czech Republic.
The Slovene response came in chorus with that of the Czechs: if French firms uprooted factories in Slovenia, the Slovene government would send French giants such as EDF and Danone packing.
There have also been friction between Germanys Angela Merkel, Frances Sarkozy and Britains Brown regarding the best way to combat recession. Wary of repeating the Weimar experience of runaway inflation when barrow loads of notes would not suffice to pay for a loaf of bread, Germany has advocated increased belt tightening. Brown has called for pushing up consumer demand by offering bailouts, while Sarkozy has advocated investing in infrastructure rather than stimulating demand. There have been some rather public spats between Sarkozy and Brown because of the latters penchant for denigrating his peers in order to promote his own image.
Nearly everybody has been caught by surprise at the speed at which unemployment is increasing, and those at the helm are groping for a response. Friction between European leaders is inevitable, said Nicolas Veron, a fellow at Bruegel, a research centre in Brussels that focusses on Europes role in the global economy.
In emerging economies such as those in Eastern Europe, there are fears that the growing joblessness might encourage a move away from free-market, pro-Western policies, while in developed countries unemployment could bolster efforts to protect local industries at the expense of global trade. Indeed, some European stimulus packages, as well as one signed on February 17 by President Barak Obama in the United States, include protection for domestic companies, increasing the likelihood of protectionist trade battles.
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