Weak links of the European Union,

The financial crisis that so severely affected the whole world determined which were the most instable and uncompetitive national economies. A weak link was also found in the European Union – Greece suffered itself and almost brought the Euro down. Spain and Portugal also started talking about a debt crisis. The younger members of the EU had a rough time too – linked to a currency with “problematic” countries, Western European states were also affected by the Euro weakening. At one point the situation frightened the Germans quite seriously – rumors had it that soon Germany would drop out of the European currency and return to marks. However, the European Union, though with a delay, took measures on rescuing Greece and stabilizing the common currency. Greece, which for a long time didn’t take its debt problems seriously, suffered from the crisis more than other countries of Western Europe. The government now has to pass extreme measures and draconian laws. A few days ago a decision was taken to conduct a partial privatization of the state railway company Hellenic Railways, the monopolist on the market of cargo and passenger transportation in the country, within the program on reducing state expenses. Besides, the Greek government also intends to partially privatize the postal service and water supply companies operating in Athens and Thessaloniki. Other probable subjects of privatization include health care and public utility companies, banks, casinos, oil refineries, and telecommunication companies. Athens expects to earn three billion Euros this year thanks to the program, and one billion in successive years. This way the government expects to reduce the fiscal deficit, which in 2009 reached a staggering 13.6 percent of the GDP. However, these measures to rescue the sinking economy of Greece are not the first desperate attempts to get rid of debts. Earlier the government declared its resolute intention to tighten the Greeks’ belts. The latter, of course, were indignant and started protests. The confrontation of the government and trade unions is still going on. Greeks call the attempts of the government to cut salaries and increase taxes for consumer products “beastly.” As Reuters has reported, the planned pension reform presupposes canceling a number of bonuses to pensioners, shortening long-service increment pensions by seven percent by 2030, and increasing the retirement age; in particular, the retirement age for women will be increased to 67 years.

Portugal, in turn, boasts that “We are not Greece.” The fiscal deficit of the country currently constitutes more than nine percent of the GDP. This is an appreciable difference compared to Greece’s 13. However, according to the norms of the European Union, the deficit cannot exceed three percent. The Portuguese government undertook reforms as well. The parliament adopted the action plan suggested by the government. It presupposes increasing income and value added taxes, and also salary cuts for high level officials. According to this plan, Portugal will save two million Euros this year, and will decrease the fiscal deficit to 7.3 percent. By 2011, as it is anticipated by the Portuguese government, the deficit will constitute 7.3 percent of the GDP. However, the Los Angeles Times points out that the hasty shortening of budget payments and taxes increase can lead to a substantial spike in unemployment and curtail economic growth, which is badly needed by the country. Actually, it’s time for Portugal to become nervous – GDP per capita is the lowest in Western Europe. Such serious problems as the competitiveness of the country, especially after introducing Euro in 1999, remain. Critics and even supporters of the plan of actions warn: many Portuguese will feel the effect of austerity measures. People directly targeted by the measures will suffer most of all. The Spanish government found itself in a difficult situation too: on the one hand it is pressured by trade unions, eternal opponents of dramatic savings measures, and on the other hand – by investors demanding budget cuts. Spain is expecting the new plan to rescue the economy, to be voiced by Prime Minister Jose Luis Rodriguez Zapatero this week. He already obliged himself to reduce the fiscal deficit to three percent of the GDP by 2013, instead of the 11.2 percent which Spain has now. In the light of the international complex of measures to save Greece, investors expect that Spain will demonstrate stability and will cope with its deficit without an external help. Taking into account the size of the Spanish economy, rescuing it would be much more expensive than Greece.

The concept of globalization tied the countries of the European Union by one strong thread, and no one will be able to wave away debt-ridden countries. It is still an important issue whether the “problematic” countries of the European zone will be able to stand on their feet or if they will undermine the EU economy, provoking a new wave of the global crisis. Hopefully, things will get better.