President of the Council of European Finance Ministers and Prime Minister of Luxembourg, Jean Claude Junker, won sudden fame when he stated, 'We all know what we have to do, but if we did it we would all lose in the next elections.' This comment reflects the impotence of politics and the road that Europe now finds itself on, writes Roberto Savio, founder and president emeritus of the Inter Press Service (IPS) news agency.
In this article, Savio writes that the government of Portugal is the latest victim of this process. All of the mechanisms created by European institutions to help members in crisis have as a condition the elimination of national budget deficits. Greece, Ireland, and now Portugal have access to billions of euros in assistance, but it is in the form of loans and while the interest rate might be slightly lower than market, it is still very high and debt piles up fast.
As always we are seeing that the financial sector is playing an important role. The banks of Germany, France, Great Britain, and Holland, for example, have a large quantity of bonds for Greece, Ireland, and Portugal. But if the latter can't pay their debts, the banking system of the former, thought to be in good shape at present, will be faced with another serious crisis.
(*) Roberto Savio is founder and president emeritus of the Inter Press Service (IPS) news agency.
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