The euro crisis is back with a vengeance… again.
Following the commitment from the European Central Bank to buy up government debt and the German constitutional court giving the European Stability Mechanism the thumbs up (on the surface at least), we were, for a very brief time, given a break from the constant barrage of bad news coming out of the region. At last the eurozone seemed to be on the right track.
Then things really kicked off. Overnight there were violent protests in Greece over proposed cuts that the government needs to implement in order to qualify for the next round of bailout funding.
Organised by the country’s two largest unions, and representing half of the workforce, the country ground to a halt as demonstrators took to the streets en masse.
But the striking workers' efforts are likely to come to nothing. Simply put, austerity is the only path left to take if Greece wants to keep the euro.
At this stage Greece is mere weeks away from bankruptcy. If the next tranche of bailout funds doesn’t come through, the country will be headed for an exit from the eurozone. And it won’t be pretty.
Prime Minister Antonis Samaras has no option but to implement the terribly unpopular measures. But somehow this still doesn’t seem to have fully hit home.
He continues to ask Europe for more time, and risks sending his country back to the drachma as the bloc loses patience over his inability to meet targets.
Samaras' role is no doubt a difficult one. But by suggesting to his people that Greece could and should be given more time, he makes the situation worse.
Planting this poisoned seed of hope in his people’s minds only paralyses the country further, and in a way encourages demonstrations.
Europe will not suffer his antics for much longer. If Greece wants to stay in the eurozone Samaras’ best option is to take a hard line with his people to get the country back on track.
But Greece isn’t the only country in the bloc dealing with social unrest. And Samaras isn’t the only leader struggling to contain the fallout from an austerity backlash.
Enter Spanish PM Mariano Rajoy, who can’t seem to put a foot right these days.
Spain is due to unveil its latest budget today, with austerity set to steal the show. In a precursor of what’s to come, violent protests erupted in Spain earlier this week, as workers took to the streets to demonstrate against another round of spending cuts and tax hikes. More demonstrations could be seen again once the budget is announced.
The next test comes on Friday, when the country is due to give its verdict on its flailing banking sector.
This is anticipated to be the last step taken before a sovereign bailout is requested by the government.
Still, if Rajoy continues to place pride above necessity and fails to be clear about the amount of funding required and Spain’s determination to suffer under the same conditions imposed on the other countries, he risks destabilising the bloc again.
Insanely, Rajoy does not believe that Spain should have to suffer under the same bailout conditions as Portugal, Ireland and Greece. To this end, he has insisted on dithering on the bailout request that is an almost certainty for the country.
By somehow believing that Spain should be treated as a special case, Rajoy shows his utter lack of respect for the other bailout countries, and divides the bloc further. There is simply no way that Brussels and German Chancellor Angela Merkel can allow Spain preferential treatment without risking the stability of the bloc, and Rajoy’s insistence threatens not only his own country, but the entire region.
Like his counterpart in Greece, Rajoy would do well to just knuckle down and get on with what needs to be done rather than wasting time asking for preferential treatment. If he insists on proceeding with his current line, the eurozone faces an even shakier future.
Follow @ClionaODowd on Twitter.
Stoking a violent Spanish fantasy
Ahead of Athens' budget hand down protests have flared up in Spain and Greece, while the countries' leaders foolishly stoke popular hopes of an impossible anti-austerity solution.
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