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EU finance ministers defend austerity

EU finance ministers defend austerity

April 10th, 2011 by GABRIELE STEINHAUSER and PABLO GORONDI, Associated Press in News

GODOLLO, Hungary (AP) - European finance ministers meeting Saturday defended the painful austerity measures being imposed in the region as necessary to defeat a crippling debt crisis. But tens of thousands of people protested nearby to condemn what they called unfair and risky sacrifices imposed on workers instead of the bankers who caused the problems.

About 50,000 people took part in the peaceful demonstration in Budepest, which was called by many European unions about 30 kilometers (20 miles) from where the EU ministers met. Many of the protesters complained about what they called unfair restrictions on their salaries and pensions.

In Godollo, the town where the ministers met, Spanish Finance Minister Elena Salgado said budget cuts "are necessary because we need to grow and grow better and reduce our deficit to be able to continue paying for the state of well-being."

In recent months, Spain's Socialist government has launched new austerity measures to get a grip on the country's large budget deficit. He said even though unemployment remains at around 20 percent - the highest in the EU - the cuts appear to have succeeded - at least for the moment - in re-establishing some market confidence in the Spanish economy.

"While we understand their position perfectly, we would like them to understand ours too," Salgado said of the protesters.

Salgado's counterparts also tried to convince voters concerned over their pensions and job security that new measures to improve the competitiveness - and fiscal sustainability - of their economies did not constitute an attack on Europe's social model.

"The people have to understand that we're not saving to upset them, but we are saving so that we can finance investments into social policies in the future," Luxembourg Finance Minister Luc Frieden said.

Swedish Finance Minister Anders Borg said he didn't see a need for the demonstration. "It is quite clear that the European social model is being safeguarded," he told reporters.

But union leaders said workers already have been burdened excessively and it is time that bankers take more responsibility for the financial woes across the continent, which have led to bailouts for Ireland and Greece, and one under way in Portugal.

"We are expressing ourselves in different languages, but we share the same feelings and values," Candido Mendez of Spain's General Workers Union told the large crowd, which included union members from 22 European countries. "We want a Europe with more jobs and more social justice."

John Monks, secretary general of the European Trade Union Confederation, said Europe's most successful and competitive countries are those like Germany and the Nordics, which have the "most socially minded market economies."

"They look after the people who can't look after themselves," Monks said. "That is a good model, not just for Europe but even for Wisconsin."

"Some countries clearly are going to have some measure of austerity ... though the pressure is on to pay back too much, too quickly," said Monks, adding that making budget cuts during a recession risks deepening the crisis. "It is clear from the Greek and Irish experiences that the policies being pursued now aren't working."

On Friday, EU finance ministers agreed in Hungary to grant financial help to Portugal once the debt-ridden country has signed on to a radical overhaul of its economy.

Similar bailouts for Greece and Ireland last year have sparked voter outrage as well as questions over how the deep spending cuts will affect those countries' ability to grow again.

German Finance Minister Wolfgang Schaeuble said it was not entirely clear whether a recent decision to cut the interest rate in the EU and extend the repayment deadline on Greece's €110 billion rescue loan was enough to get the country back to health. In return for those better conditions, Greece also agreed to a €50 billion privatization program.

"Whether that is enough, how that will continue, we will have to see," Schaeuble told reporters. "But we have proved that through sensible cooperation we can always cooperatively find solutions to new problems."

Several media reports over the past week said that eurozone states were considering a restructuring of Greece's massive debt - some 150 percent of economic output - but European officials have denied a default was in the cards.

"We do exclude restructuring," the EU's Monetary Affairs Commissioner Olli Rehn said Saturday.