Stick to budgets, EU nations urged
BRUSSELS — Germany and the European Commission on Tuesday called on European Union nations to stick to their agreed budget cuts despite mounting voter discontent, but promised some new efforts to enhance growth to alleviate economic hardship.
In elections on Sunday, voters in France and Greece gave strong support to parties who want to roll back or slow down the spending cuts and tax increases that have defined Europe’s response to its debt crisis.
That added to cries from labor unions and some governments for more measures to boost economic growth to offset the loss of jobs brought on by austerity measures.
Officials in Berlin and Brussels said there was some room for more changes to help growth, but insisted that any new growth policies must not detract from Europe’s drive to lower its deficits.
European Commission President Jose Manuel Barroso said there could be no fundamental change in direction.
“What member states have to do is be consistent, implementing the policies that they have agreed,” Barroso told reporters on the eve of Europe Day, which celebrates the evercloser cooperation between the nations of the continent. “Now, the key is implementation.”
On Sunday night, however,
the calls from some European capitals were different, with French socialist president-elect Francois Hollande vowing that “austerity can no longer be inevitable.”
In Greece, parties that rejected belt-tightening made big gains and there were fears that the new leadership would renege on commitments made to secure the country’s huge rescue loans. An outright rejection of the bailout could eventually see Greece drop the euro currency, a possibility that was unnerving financial markets.
Alexis Tsipras, head of the Radical Left Coalition that came a surprise second in Sunday’s tumultuous election, called on Greece’s two main party leaders to renege on their support for the multibillioneuro international bailout that is keeping Greece afloat.
“There is no way we will sneak back in again what the Greek people threw out” in the election, he said, referring to resented austerity measures that have slashed incomes since early 2010 and led to record high unemployment of over 21 percent.
Tsipras won 16.8 percent of the vote and 52 seats in the 300-member parliament. He received the mandate to form a government after conservative New Democracy leader Antonis Samaras, who came in first with 108 seats and 18.9 percent of the vote, tried and failed on Monday.
“This is a historic moment for the Left and the popular movement and a great responsibility for me,” Tsipras said, adding he would try to form a left-wing government that will “end the agreements of subservience” with Greece’s international bailout creditors.
“We call on the authorities in Greece to quickly move toward stability so that a government of reason can be formed,” German Foreign Minister Guido Westerwelle told reporters in Berlin on Tuesday, saying that he viewed developments in Greece “with great concern.”
“It’s important for us that the steps that have been agreed upon with the government be implemented,” Westerwelle said. “They are not up for negotiation.”
As the debate over austerity intensified, European Union President Herman Van Rompuy called for an informal summit of the 27 EU government leaders on May 23 to discuss economic growth and to prepare for a summit in June focused on job creation.
Barroso discounted the notion that Europe was going to revise its fiscal policy commitments.
He insisted that sustained debt reduction was essential to convince markets, build confidence and cut borrowing costs. “Every euro spent on interest payments is a euro less for jobs and investment,” he said.
Germany largely backed the Commission’s stance of staying rigid on fiscal restraint while seeking concerted measures for growth.
“The end of the debt policy has been agreed in Europe. It has to stay that way,” said German Foreign Minister Guido Westerwelle in Berlin.
Like Barroso, he suggested that economic growth could be enhanced, but through structural changes — not through increased government spending.
“I’m very confident that we will be able to overcome the crisis this way with less debt and more growth. Both belong together,” he said.
The debate on the policies should come up at the May 23 summit, the first for newly elected President Hollande.
Outgoing president Nicolas Sarkozy and German Chancellor Angela Merkel worked closely together to set the EU course out of the financial crisis. Now, Hollande comes in with his own agenda.
He said his first act as president will be to write a letter to other European leaders calling for a renegotiation of a budget-trimming treaty aimed at bringing the continent’s economies closer together — a stance that puts him at odds with Merkel.