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Greek MEP Yanis Varoufakis has endorsed the idea of mutualised debt across the EU but warned the latest decision is a step towards Europe’s disintegration. In his latest column in the Guardian, he outlines three reasons why.
He writes: “First, the recovery fund is a distraction from the elephant in the room: massive austerity.
“According to the International Monetary Fund, the eurozone’s total 2020 income will fall by 10 percent, causing an average budget deficit of more than 11 percent, with weaker countries such as Italy and Greece facing a much larger drop.”
Although outlining austerity will not be catastrophic, he claimed the whole continent will be treated to an “intensification” of the doom loop between austerity and recession.
Mr Varoufakis then says the recovery fund is puny and for it to be able to defend the union, it should “pack a fiscal boost”.
He continues: “We must first ignore the new loans on offer from the recovery fund (since new debt has never helped the insolvent) and concentrate exclusively on net grants.
“Italy has been allocated around €80billion and Greece €23billion.
“However, every member state must take on part of the new €75billion EU debt.
“Italy, for example, is liable for just under 13 percent of this debt while poorer Greece is liable for 1.4 percent.
“Once we subtract these new debts, Italy’s and Greeces’ net grants come to just over €30billion and €21billion respectively – or 0.6 percent and two percent of GDP on an annual basis between 2021 and 2023.
“Compared to the prospect of austerity equivalent to nine percent of GDP, which will be required to balance their budgets, these are puny sums.”
His third point on how the bailout will eventually collapse the EU is “the political conditions under which the funds will flow are a Eurosceptic’s dream”.
Mr Varoufakis goes on to explain how divisiveness has been added into the EU recover fund and claims the whole thing has been designed by a “cunning Eurosceptic”.
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He points out: “As if that were not enough, our great and good leaders also decided that each national government will have the right to freeze payments, for up to three months, to any government while it scrutinises how the money is to be spent.”
Although Mr Varoufakis hopes Europe is moving in the right direction, he cannot shake off a hunch the EU is moving towards disintegration.
He concludes: “Whether I am wrong (as I hope I am) or not will hinge on whether, by next year, a majority of Europeans feel that the recovery fund helped them recover.
“If they do, maybe the EU’s common debt can prove itself a harbinger of shared prosperity.
“For my part, however hard I try, I cannot see how this might be possible.”
The EU recovery fund agreement came to light after nearly five days of discussions and only after both the EU and opposing member states agreed to fundamental compromise on the proposal.
But Sweden MEP Charlie Weimers warned the hard stance Emmanuel Macron, Angela Merkel and the bloc adopted to secure an agreement will ultimately spark a new wave of Euroscepticism among voters.
Speaking to Express.co.uk, Mr Weimers said: “I think the fact that Macron and Merkel and the others are so willing to run over the Frugal, it will just increase scepticism.
“I’ve read the Swedish Financial Times and it’s analysis said this is ‘economic madness, so is the United States of Europe created.’ This is a newspaper known for its pro-EU stance, historically.
“When it trickles down, I think that it will definitely increase scepticism among voters.”
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