Austerity: There is an alternative

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Politics & economyEurope-Global


On 4 April 2014, about 50,000 people are expected to march in the streets of Brussels, responding to a call for action from the European trade unions. They will demand an end to austerity and a more prosperous, equal and democratic European Union.

Solidarity can be at the heart of policies to exit the debt crisis.

The European Trade Union Confederation (ETUC) demands a European Union that puts people, not the financial sector, out of trouble.

Social justice in times of crisis is not an unreal, simplistic or impossible demand.

Iceland did exactly that. During the crisis, the country’s government prioritised social progress.

In 2008, all three of Iceland’s major banks collapsed. But instead of bailing out the banks, as the European Union countries did, Iceland helped its citizens.

The Icelandic government created three new banks where it transferred non-toxic assets. The "toxic" loans and financial products had no government backing. And the government also made it illegal to move money out of the country and raised taxes on the wealthy.

Today, Iceland spends more on social services and has higher wages than when the crisis began.

In contrast, in the European Union, poverty has worsened.


The European Union has the potential to combat the crisis

Iceland is not a model to reproduce but certainly a model to get inspiration from.

This is why trade unions demand increased public expenditure, with inclusive welfare systems.

They are tools to bring an end to the crisis. The European Union can invest in the youth, the environment, quality jobs, innovation, research and development, and education.

These investments can be funded by putting an end to tax fraud and tax evasion and by implementing a Financial Transactions Tax.

“Austerity is not working! Austerity has caused a mounting social and economic crisis: over 26 million Europeans are jobless, 10 million more than in 2008. We have 26 million reasons to demonstrate and demand a New Path for Europe, based on investments, quality jobs and equality” said Bernadette Ségol, ETUC General Secretary.

Furthermore, member states of the European Union could audit their public debts.

Ecuador audited its public debt in 2007, with the help of civil society representatives, to determine which loans were illegitimate, illegal and/or odious.

Thanks to this move, the Ecuadorian government saved US$ 7 billion and reinvested the money on social services and infrastructure. It also implemented policies to raise wages.

In December 2012, Ecuador had a lower inequality rate than in 2006.

When the banks fail, the State can act in various ways. There is no one-size-fits-all solution. But the solution has to come from and for the people. Not from international financial institutions linked to the banks.

Who would call pyromaniacs to put down a fire?