03 Oct 2011

Eurogroup double penalising countries under austerity measures

Not content with increased austerity measures, France and Germany are demanding the European Commission to remove financial support from those countries that do not meet EU budget consolidation demands. This will result in countries such as Greece being denied access to EU funds even those earmarked to help the disadvantaged. With a quarter of Greece’s population now below the 2009 poverty line and facing increased austerity measures – this can only make the situation worse.

In a letter of 17 August, President Sarkozy and Chancellor Merkel demanded that "payments from structural and cohesion funds be suspended for euro-zone countries that do not follow recommendations of excessive deficit procedure," (see letter of August 17 from President Sarkozy and Chancellor Merkel to the President of the European Council Van Rompuy)

The European Commission may adopt this measure at the College of Commissioners on October 5. Social Platform asks the Commission to stand against such a proposal by not including conditionality in the next General Provisions for the Structural funds.

This additional financial mechanism will directly target the population. For example the next European Social Fund aims to support member states in alleviating poverty. For instance in Greece, as a result of the austerity measures and the wider recession, 5% of the population saw their 2010 incomes fall below the 2009 poverty line, swelling the ranks of those who were already – and remained – in poverty (another 20% of population)[1]. While yesterday the Greek government, under pressure from the Troika, approved yet another austerity plan to lay off 30,000 civil servants within a year. Yet despite the austerity measures adopted in the last two years, the public deficit will be above the demands from the EU and the IMF (8,5% instead of 7,6). The potential suspension of ESF funds due to this situation will only make things worse.

Mr Conny Reuter, President of Social Platform states that “People worst affected by the crisis will suffer a double punishment: reduction of their incomes through austerity measures and deprivation of financial support to combat poverty due to the fiscal conditionality. Not getting the support of the ESF will work against social cohesion and the achievement of the EU poverty target”. “What we need is structural support for social recovery and not increasing exclusion and poverty for the sake of financial and fiscal orthodoxy.”

[1] ETUI, Issue 5/2011, Inequality, poverty and the crisis in Greece

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