After the economic collapse of Greece which led to a new bailout program, another interesting question rose – Who’s next?
This article is prepared by Viktor Stoilov exclusively for SouthFront
‘Europe is finished. We cannot just talk about cutting and saving, growth and innovations are important.’ – these were the words of Italy’s Prime Minister Matteo Renzi. Renzi is in charge of the 4th biggest economy in the Eurozone, and is the leader of a party which supported Germany’s plans on solving the crisis. However, at the same time Italy has one of the biggest public debts in Europe – about 130% of its GNP. In reality, the only thing saving Italy right now is the fact that its bonds are in the hands of internal creditors. In this situation Renzi has two options.
The first one is to start cutting on the expenses, wages and liabilities. It’s highly unlikely due to the fact that he still needs people’s support which is anything but growing, and if you’re asking why, a good example is that 40% of the young people in Italy are unemployed.
The second option is to ask for more and more loans while emitting cheaper and cheaper bonds which would be more profitable. For economic growth we cannot even talk about, while renewing ECB’s help for Italy’s Central Bank would be the best evidence that Italy is on the edge of the ‘Greek precipice’.
But Italy is not the only country in trouble. The next one is Spain. Though the country expects a 3,3% economic growth this year, we shouldn’t be fooled by these economic facts which have nothing to do with the reality in the country. The unemployment rates among the young people are more than 50%, just like in Greece. ‘Greek’s ‘OXI’ changed Europe’, said Pablo Iglesias, the leader of the party Podemos which is the Spanish analogy of Greek’s Syriza. Podemos’ is a strong coalition of young politicians who are getting more and more support because of their plans to fight the dramatic unemployment rates. In spite of that, Spain is following Greek’s path and destiny as well.
Following what’s going on, Portugal is in big trouble as well, actually in far bigger and unexpected one. 70% of the national bonds are in the hands of foreign creditors. Portugal’s debt is the same as Italy’s one – 130% of the country’s GNP, but they find themselves in a worse position because at least 70% of Italy’s bonds are in the hands of domestic creditors unlike Portugal’s ones. The present government is expected to lose the upcoming elections and give the power to the socialists led by António Costa who promised to put an end to the ‘tightening measures’ and openly start a war with Berlin’s plans.
For the German architectures of the European policies, that is another upcoming problem. We can predict that they won’t back down from their interests and try to the same as they did with Greece. Will Italy, Spain and Portugal resist the pressure? – We are yet to see.