Euro-zone countries agree on a new Pact

SPEAKER: The leaders of the 17 countries of the Euro-zone have agreed on the new package of measures aimed at strengthening the single European currency and aiding the recovery of their domestic economies. However the measures are unlikely to be welcomed by Europeans as they envisage tightening belts in the name of stability.

SPEAKER:  The Euro-zone countries have approved a Pact, which obliges them to make their economies more competitive. In particular, the document envisages the European Commission control over salary increases. Whilst it does not ban the indexation of state wages for workers, it prescribes the restriction and harmonization of such revisions within the countries of the Euro-zone.

Unemployment benefits will be cut in a bid to make the jobless look for work more vigorously.

Besides that, there are plans to update the education systems of the Euro-zone countries and to close some professional training institutions, which do not provide in-demand job skilling. 

The document does not set a single retirement age but obliges the Euro-zone countries to rise the retirement age and reduce pensions.

Of course, such austerity measures are not welcomed by the people in the Euro-zone countries with a wave of protests demonstrations already taking place. On Tuesday, Portugese transport workers went on strike, protesting against the unpopular economic measures. Such sentiments will continue to dominate in European society for quite a while, Vladislav Belov, the head of the Center for German Studies of the Institute of Europe of the Russian Academy of Sciences, says.


VOICE: The decision of the 17 Euro-zone countries is aimed at strengthening their economic and financial policies in order to protect the single European currency from speculative fluctuations and the crisis as a result of uncoordinated financial policies. These decisions imply the reduction of state budget spending and this will naturally lead to popular discontent. But there is no alternative to such measures.

SPEAKER:  Experts advise the Europeans to accept the situation as is and to focus their attention on other agreements reached by the countries.  In 2013, the European Financial Stability Fund, which was formed amid the debt crisis in Europe in May 2010, will be transformed into the European Stability Mechanism. This institution will have 500 billion euros at its disposal in order to male loans. The fund will not only provide loans to the needy countries of the Euro zone, but also buy up the bonds of troubled governments that urgently need money. However the fund will grant such loans on the condition of economic reforms.

The approval of the Pact by the Euro-zone states has already had a positive effect on the Euro – it has strengthened. But experts are in no hurry to make long term forecasts. A lot will depend on how successful the governments of the Euro-zone countries are in convincing their citizens of the need of such reforms.           


Leave a comment