One year after the first rescue loans of the EU and IMF and the following austerity measures the debt keeps increasing in Greece. Since then the country has been experiencing a deep social crisis. Protests aroused. Hundreds of thousands took to the streets. In Germany and elsewhere politicians and the media blaim a bloated state and luxury lifestyle for the financial situation. But economists and activists paint a different picture. They argue that the aggressive export policy of Germany, excessive interest rates for rescue loans and corrupt Greek politicians fed among others by German corporations like Siemens have substantially contributed to the crisis.
In order to assess the legitemacy of the Greek Debt economists, politicians, intellectuals and activists around the world are demanding an independent debt audit like the one in Ecuador. At the same time half a million people protested in March against the austerity measures of the British government. These measures represent the deepest cuts in Great Britain since World War II. The protests ignited when the government anounced to lay off 300.000 civil servants while at the same time reducing corporate taxes. Some companies like Vodafone pay only minimal or no taxes at all in Great Britain.
While the German government presents the Euro crisis as a problem of debt overload like in Greece Heiner Flassbeck, senior economist of UNCTAD says that the root causes for the problem lies in the unresolved financial crisis. Like Greece Portugal is now facing similar destructive austerity measures. In Ireland one can see a severe banking crisis. But EU and the German government are bailing out the the indepted banks and shift the costs of this crisis to the population.
The current account deficit of ten percent in Spain is not sustainable, says Flassbeck. Instead of talking about strengthening competitivness in the Euro Zone like German chancellor Angela Merkel does one should work on closing the huge gap with Germany to stabilize the economy in Spain. The Euro Plus Pact approved by the EU summit in March doesn't solve the problem, adds Flassbeck. The same would be true for the so called "haircut", the partial waiver of debts, and the creation of a "South Euro". The trade imbalances which have caused the economic problems of the Euro zone have grown to a large extend out of the persistent wage dumping in Germany. In 1999 Heiner Flassbeck left the red-green government under chancellor Gerhard Schroeder because of the neoliberal policy.