NEW YORK – Xenophobia and extremism are symptoms of societies in profound crisis. In 2012, the far-right Golden Dawn won 21 seats in Greece’s parliamentary election, the right-wing Jobbik gained ground in my native Hungary, and the National Front’s Marine Le Pen received strong backing in France’s presidential election.
Poverty is on the retreat. Despite the global economic downturn, the World Bank and UN reported this year that the number of people living in extreme poverty has dropped in every region of the world for the first time since record keeping began.
Europe has been in a financial crisis since 2007. When the bankruptcy of Lehman Brothers endangered the credit of financial institutions, private credit was replaced by the credit of the state, revealing an unrecognized flaw in the euro. By transferring their right to print money to the European Central Bank (ECB), member countries exposed themselves to the risk of default, like Third World countries heavily indebted in a foreign currency.
With the EU summit set to start on Thursday, pressure is on European leaders to find a way out of the euro crisis. Investor George Soros is pessimistic that a solution will be found and says time is extremely short. In an interview with SPIEGEL ONLINE, he warns that Germany could develop into a hated, imperial power.
At the meeting in Rome last Thursday the four heads of state agreed on steps towards a banking union and a modest stimulus package to complement the fiscal compact. But Chancellor Merkel resisted all proposals to provide relief to Spain and Italy from the excessive risk premiums prevailing in the market.
At their meeting in Rome last Thursday, the leaders of the eurozone’s four largest economies agreed on steps towards a banking union and a modest stimulus package to complement the European Union’s new “fiscal compact.” Those steps are not enough.
German Chancellor Angela Merkel resisted all proposals to provide relief to Spain and Italy from the excessive risk premiums that both countries are now confronting.