• Latest News
  • Pitch a Story
  • Work with a Journalist
  • Join the Blog Squad
  • Afghanistan
  • Africa
  • Asia
  • Baltimore
  • Canada
  • Egypt
  • Europe
  • Latin America
  • Middle East
  • Russia
  • Economy
  • Environment
  • Health Care
  • Military
  • Occupy
  • Organize This
  • Reality Asserts Itself
  • US Politics
  • Restructuring Europe - For Whom?

    The structural reform now being discussed in Europe would mean an even more neoliberal agenda -   July 9, 2012
    Members don't see ads. If you are a member, and you're seeing this appeal, click here


    Share to Facebook Share to Twitter

    You are an inspiration. Thanks for everything you are doing. - Brenton
    Log in and tell us why you support TRNN


    Restructuring Europe - For Whom?PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay, coming to you from Baltimore.

    The Financial Times has a piece in it today. The writer calls the euro crisis a spiral of doom, and he suggests more some kind of cohesive plan or strategy about European banks. In fact, the debate about what to do about the eurozone swings anywhere from get out of it, which you hear most prominently in Greece, to, on the other end of the spectrum, some sort of United States of Europe, a virtual full integration of the various national states. And then on that spectrum you have lots of proposals in between.

    Now joining us to talk about the debate is Malcolm Sawyer. He's a professor of economics at the University of Leeds in U.K. He's managing editor of International Review of Applied Economics. He's currently working on a project on financialization, economy, society, and sustainable development. And he's coming to us today from Leeds. Thanks for joining us, Malcolm.


    JAY: So what is your take on all of this? You know, on the sort of even progressive side, you know, you could say left of center and wherever, there the debate seems to be raging just as furiously whether there should be more centralization in Europe or should—less, and should various countries get out. What's your take?

    SAWYER: Well, I think there are a number of sort of separate questions involved. If we take the issue to do with the banking union, what we have currently is a set of national banks operating on national banking systems, to some degree with their own regulation—it's not always clear who has responsibility for them, for example, who would be undertaking deposit insurance or who would be bailing them out if that were the case. And the proposals, really, in terms of banking union are to move that to the European level, so that there's some sort of degree of integrated financial system, in the sense that there would be a common set of regulations, that who was responsible for deposit insurance, who was responsible for any bailout, and so on will become much clearer than it is currently.

    So I think a second set of questions is, of course, how would that system actually be operated, and would it be operated in a way which was conducive to economic prosperity. And I think the problem at the moment is that much of the debate is over forming some kind of union, and not enough attention is being paid to how that union would in practice operate and whether it would operate in the interests of workers and the interests of economic prosperity.

    JAY: Yeah, I mean, isn't that the real question? I mean, one can imagine all kinds of ways to restructure Europe, but you've got to first ask and answer the question, restructure Europe for whom, because, you know, people on the left are saying that, you know, the more centralization you have, what you're really doing is handing more power to the financial elites of Europe, and Germany in particular, and you can't remove the political context of who's got power right now in Europe when you think about what restructuring means.

    SAWYER: Yes, I think that's right. And also alongside, for example, the suggestions over a fiscal union or some sort of political union goes along suggestions of what is usually called structural reform. Now, structural reform in practice would mean adoption of a much more neoliberal agenda. So it is also seeking to impose a particular set of policies on countries under this heading of structural reform.

    Okay. If we take the example of the proposals, the idea of some sort of fiscal union, whilst I think from the way in which a single currency would operate, some form of fiscal union, some form of fiscal transfer taking place is rather desirable, on the other hand, one would have to ask the question, how would this fiscal union be operated? Would it in effect just impose pre-Keynesian ideas and say, well, the budget has to be balanced come what may? And is this a real way of imposing austerity through another route? So there's no purpose, really, constructing a fiscal union unless that fiscal union is operated in a way which would stimulate economic activity and indeed have a large degree of transfers of resources from the richer countries to the poorer countries.

    JAY: So I guess there's sort of short-term and longer-term way of looking at this. In terms of the shortest term, with some of the countries in such severe crisis, you know, I guess Greece being in the most serious situation, what do you think people should be demanding vis-à-vis the eurozone? Like, for example, in Greece the debate's hot and heavy weather to stay in or not. You know, some people are saying you can renegotiate the whole package and all the rest and not have such austerity and still stay in the eurozone. And other people are saying that's naive; if you really want to make the kind of reforms you're talking about, you can't do it within the eurozone. What's your take on this debate?

    SAWYER: Well, I think if one was coming at it from a sort of left perspective and the sort of economic reforms that one would want to introduce in Greece, staying within the euro will make that more difficult, in that what is being imposed on Greece through the memorandum of understanding is not only fiscal austerity but a whole set of measures of privatization, liberalization, rejection of the minimum wage, and so forth.

    But I think also, particularly the case of Greece, but in a number of other countries as well, in effect one of the major problems they face is that they have a very severe current account deficit, they have a very severe balance of payments problem. And being within a single currency means that they cannot devalue, that they therefore will find it very difficult, if not impossible, to stimulate the economy themselves through increased exports and so forth, so that they are rather stuck. So what I think a country like Greece requires is a guarantee of the funding of their current account deficit whilst they restructure their economy, but restructuring it along quite different directions to that which would be envisaged by the troika to the European Union.

    JAY: Well, you've written that the current bailout policies are essentially like sticking a bit of plaster on a crack that's bound to crack open again. So if that's the case, what do you think should be done?

    SAWYER: It's very difficult to see what the sort of way forward is. I think there firstly has to be, as it were, a recognition that the way in which the Economic and Monetary Union was constructed had what I've elsewhere called design faults. It was really badly designed, and so it doesn't operate in a very conducive way.

    That is overlaid with the attempts at various stages to impose fiscal austerity, and now fiscal austerity currently is having the effects of, obviously, creating recession, but at the same time not really going any way to reducing the budget deficit. So at a very general level, I would see that one way of proceeding has to be, ultimately, a recognition that the Economic and Monetary Union is poorly constructed and that there has to be a quite different set of policy arrangements for the Economic and Monetary Union. In one direction, I would see that as to adopt Keynesian policies of the use of budget, fiscal, monetary policy to stimulate demand; in another direction, to reconstruct economies along lines which ultimately function better, not to impose neoliberal agendas on the countries concerned.

    JAY: And if you look at the real politics at the moment, it seems like even with, you know, the change in president of France—but still the austerity hawks still seem to be holding most of the reins of power, even if some of the public discourse has sort of moved, questioning whether there's been any success, austerity. I think you wrote in one of your pieces that there's not any examples of austerity actually giving rise to growth. And we hear that even from Mario Monti in Italy, you know, where he said on—in a recent interview he said, you know, we've done everything you've said, but where's the growth? You know, we've done the financial discipline, but there's no growth happening. But that doesn't seem to be changing the weight of where things are headed. So, given that, assuming there is no big change in direction in Europe, how dangerous a moment are we, in terms of the global economy?

    SAWYER: I think we're in a considerably dangerous position. There still is the possibilities of collapse of various parts of the banking system, there's still the possibilities of countries like Greece being unable to fund their deficit and therefore having to go for yet more austerity.

    But more generally it's going to involve the European countries in slow growth, if any growth at all, a long period of austerity for most countries, for high levels of unemployment. People are now beginning to talk about no or little growth the next ten years type of scenario, so that within Europe I think there are considerable dangers of these sort of further crises and, at best, a long period of austerity.

    How much it will affect the rest of the world I find difficult to judge, because the European Union is fairly close to a closed economy. It doesn't do a great—in some sense it doesn't do a great deal of trade outside of its borders. About 10, 15 percent of its GDP is accounted for by exports, so that the impact on the rest of the world may be not as great as one might expect. But within Europe I think there are very considerable dangers.

    JAY: Well, the danger people have suggested is that it is not so much the direct loss of demand because of European recession, but the problem of either a sovereign default or a major banking default, being what they keep calling a Lehman type event triggering panic in the financial markets, and that leading to a deeper crisis. I mean, is that really possible? Or is there simply enough money in Europe that if they have to, they can keep throwing money at it just to not go over the brink?

    SAWYER: Well, I think in one sense there's enough money, for example, to fund the Greek budget deficit or to fund any Spanish deficit or whatever it might be, because in a sense when you're short of full employment (and clearly Europe is well short of full employment), if you can stimulate demand, that in turn will generate the funds in order to provide the means by which you can repay the debt, so that it is not really a matter of a shortage of money [incompr.] also in the case of Europe, and many other countries as well, of course, there isn't a shortage of resources. There's plenty of resources, plenty of people looking for work that could be put to good use and to be employed. So it's not a real lack of money that—from a Keynesian point of view, if investment and government demand goes up, that will stimulate the economy, that will produce more savings, and that will provide the means, in effect, to fund that investment and government spending.

    JAY: And what do you make of the argument we're hearing from some of the left that a lot of what's happening here in terms of the policy response to the crisis is that some of the elites in Europe want to take advantage of the crisis and sort of break the back of the European working class to the welfare state, that this is a good opportunity to kind of reshape what Europe is?

    SAWYER: I think there are certainly elements of that, not so much looking at Europe at the moment, but they're looking at the case of the—in the U.K., then you do see quite strong elements of the right being able to use this as a way of saying, well, look, the government doesn't have money to continue with welfare payment, so we've got to cut back on welfare payments; all this, the causes of unemployment, are because the labor markets are not flexible enough, so we need policies in that direction. So I think there is a sense in which particularly the neoliberals and those in government are using this as a kind of front to be able to implement policies which would not otherwise see the light of day.

    JAY: Alright. Thanks very much for joining us, Malcolm.

    SAWYER: Okay. Thanks.

    JAY: And thank you for joining us on The Real News Network.

    And don't forget we're in the midst of our spring/summer fundraising campaign. A generous couple of donors have put up $50,000 matching grant. And you know we don't get money any other way except from viewers and donors. We get very, very little, you know, big major foundation money. In fact, this year we don't have any. We're really dependent on viewers like you. So, please, if you click over here, every buck you give will be matched and you'll trigger another dollar until we reach our spring goal of $100,000.

    Thanks very much again for joining us on The Real News Network.


    DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


    Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address. Please make thoughtful comments with minimal links using only one user name. If you think your comment has been mistakenly removed please email us at


    Latest Stories

    South African Platinum Miner's Struggle Challenges ANC Leadership
    Manning Determined to Fight Back After Army Upholds 35-Year Sentence
    Hundredth Anniversary of the Ludlow Massacre
    Important Revelations From New Leaks of CIA Torture Report
    The Bundy Ranch Standoff Demonstrates Values Shared by Corporations and the Far Right
    The Resegregation of American Schools
    The Modern History of Venezuela, Why Still So Much Crime? - Edgardo Lander on Reality Asserts Itself (7/9)
    What Role Has Russia Played in Eastern Ukraine?
    Can Johns Hopkins Afford to Pay A Living Wage? (2/2)
    University Sit-In Targets World's Largest Private Coal Company
    The Modern History of Venezuela and the Need for a Post-Oil Economy - Edgardo Lander on RAI (6/9)
    Can Johns Hopkins Afford to Pay A Living Wage? (1/2)
    One Percent of Environmentalists Killings Lead to Convictions
    Investigation Finds Former Ukraine President Not Responsible For Sniper Attack on Protestors
    The Modern History of Venezuela from 1973 to the Caracazo Massacre - Edgardo Lander on Reality Asserts Itself (3/9)
    Ukraine Transitional Gov't Moves Militarily To Reclaim Seized Buildings
    IPCC Report Flawed By Narrow Focus on Carbon Emissions
    The Modern History of Venezuela: The Bolivarian Revolution - Edgardo Lander on Reality Asserts Itself (5/9)
    Obama Signs Directives to Reduce the Gender Wage Gap
    Eastern Ukraine Lacks Political Representation in Kiev
    Demystifying the Role of Mitigation in the Most Recent IPCC Report
    Hypersurveillance State Won't Prevent Another Boston Marathon Bombing
    The Modern History of Venezuela from 1973 to the Caracazo Massacre - Edgardo Lander on Reality Asserts Itself (3/9)
    Univ. of Maine Faculty Reinstated After Students Protest Against Cuts
    The Modern History of Venezuela from 1908 to 1973 - Edgardo Lander on Reality Asserts Itself (2/9)
    IMF Will Address Global Inequality, Says Managing Director Christine Lagarde
    Raising Big Banks' Leverage Ratio Good, But Not Nearly Enough
    TRNN Replay: Austerity Road to 19th Century
    Has Palestinian Maneuvering Revived Peace Talks?
    Late Jackson Mayor Lumumba's Son Wins Primary to Replace His Father, Runoff Election Ahead
    Quebecers Reject PQ and Elect a Liberal Government Representing Big Business
    TRNN Debate: Decriminalization vs. Legalization
    The Beginning of the Chavez Era - Edgardo Lander on Reality Asserts Itself (4/9)
    "Off With His Head": Court Upholds Obama's Power to Kill
    Workers at Nation's Top Hospital Strike For Fair Wages
    From Exile to Radicalization in Venezuela - Edgardo Lander on Reality Asserts Itself (1/9)
    Rwanda 20 Years Later: Genocide, Western Plunder of Congo, and President Kagame
    Ukrainian Protesters in the East Demand More Autonomy From Kiev Government
    Hunger Strikers Demand President Obama Halt His Record 2 Million Deportations
    Indian Parliamentary Elections - A Primer With Vijay Prashad
    West Looks to Carve Up Ukraine & Privatize Industries Held by Kleptocrats
    Where Are Israeli-Palestinian Peace Negotiations Headed?
    The Multiple Kingdoms of Saudi Arabia (5/5)
    Do the Afghan Presidential Elections Signify Progress?
    Republican Presidential Hopefuls Pay Homage to Billionaire Casino Tycoon Sheldon Adelson
    Will Extremist Lieberman Become Israel's Next Prime Minister?
    Why do the Saudis Want the US to Attack Iran? (4/5)
    Immigrant Advocates and Families Tell President Obama 'Not One More'
    Elections, Pipelines, and Protests - The Canada Panel
    Chris Hedges on "Israel's War on American Universities"
    Baltimore Residents Decry Lack of Affordable Housing
    Yellen Talks the Talk But Will She Walk the Walk?
    Hopkins Hospital Workers Speak Out against "Poverty Wages"
    Will Venezuela's New Floating Exchange Rate Curb Inflation?
    The European Central Bank's War on Wages is Pushing Europe's Economy to the Brink
    Supreme Court Decision Opens Floodgates for More Campaign Cash
    Charles Keating, the Financier Behind the Savings and Loan Scandal, Dies at 90
    Saudi Arabia and the al-Qaeda Monster (3/5)
    Maryland Residents Voice Opposition to Natural Gas Fracking Export Facility
    Supreme Court Ruling Gives Wealthy Individuals More Influence Over Elections
    What are the Saudis Afraid Of? - Madawi Al-Rasheed (2/5)
    Baltimore's MICA Adjunct Professors Set to Vote on Unionization
    Boycott of Israel Moving to Next Level?
    Hypocrisy Dressed Up as "Realism" Justifies American Alliance with Saudi Dictatorship
    Immigration Reform in the Shadows of Cesar Chavez's Legacy
    Leaked Senate Report Shows Use of Torture As "Ineffective"
    UN Report Says Climate Change Will Threaten Food Production Worldwide
    The Hypocrisy of US Calling for Enforcement of International Law
    How the Ecuadorian Economy Grew in a Global Recession
    'Shadows of Liberty' Trailer
    Kristina Borjesson on Why CBS Shut Down Her investigation into Flight 800 (2/8)
    Glen Ford on Racism in the American Media (3/8)
    Paul Jay on What Drives Corporate Media and What Drive The Real News (4/8)
    Creating a New Media Paradigm After Citizens United (5/8)
    Should The Left Engage with the Mainstream Media? (6/8)
    What Is the Financial Backing For The Real News? (7/8)
    Standing up to Character Assassination (8/8)
    Oligarchs, Fascists and the People's Protest in Ukraine
    TRNN Debate: Is Obamacare In the Interest of Workers?
    Too-Big-To-Fail Advantage Remains Intact For Big Banks
    Obama and the Saudi Agenda
    TRNN Replay: Investigating the Saudi Government's 9/11 Connection and the Path to Disilliusionment - Sen. Graham on Reality Asserts Itself pt 1
    The Iraq War's Real Legacy
    Petitions with 100,000+ Signatures Call for Snowden's Passport to be Reinstated
    We Need to Harness People Power - Andy Shallal on Reality Asserts Itself (4/4)
    BC Pipeline Fight and Quebec Elections - The Canada Panel
    Jonathan Schell - 1943-2014: Board Member of TRNN on Why We Need The Real News
    Teachers on Strike from the UK to Argentina
    Connecticut Poised to Become First State with $10.10 Minimum Wage
    Oil Spill Threatens Wildlife and Local Economy
    DC School Test Scores Up, But Poor Black Kids Are Doing Worse - Andy Shallal on RAI (3/4)
    Obama's Proposal To End NSA Bulk Data Collection Won't Protect Privacy
    How Google, Apple & The Biggest Tech Companies Colluded to Fix Workers' Wages
    An American Should be One that Questions Their Government - Andy Shallal on RAI (2/4)
    What's Driving Putin & Obama's Posturing on Ukraine?
    Hundreds of Students & Faculty Occupy College Campus to Fight Cuts to Public Higher Ed
    Due Process 'Impossible' In Harsh Death Sentencing Of Over 500 Muslim Brotherhood Members
    Has Anglo-American Capitalism Run Out of Steam?
    Being the "Other" in America - Andy Shallal on Reality Asserts Itself (1/4)
    TRNN Debate: Should Baltimore 'Ban The Box'?
    How Fallujah Became the Iraqi Government's New Battleground
    Why I Decided to Blow the Whistle on the NSA
    NASA Climate Predictions Show Serious Threat To Humanity
    Professor Who Teaches Israel-Palestine Conflict Accuses College of Violating His Academic Freedom
    CIA and NSA Wrongdoing Requires Independent Investigation, Says Former Church Committee Staff
    Are Tuition Breaks Enough To Combat High Student Debt And Low Graduation Rates?
    Industries Across the U.S. Are Stealing Wages From Their Lowest Paid Workers
    Who In Ukraine Will Benefit From An IMF Bailout?
    NSA Recording All International Calls From U.S.
    Israel "Making Lives Miserable" for Africans, Hoping They 'Self-Deport' (2/2)
    BP Gets Green Light to Drill in Gulf, But Has Safety Improved?
    Residents Still Not Drinking Tap Water Two Months After West Virginia Spill (1/2)
    Libya's Descent Into Turmoil Three Years After NATO Intervention
    From Pipelines to Peladeau - Canadian Report
    Israel "Making Lives Miserable" for Africans, Hoping They 'Self-Deport' (1/2)
    Congressional Progressive Caucus Budget Strikes Back Against Austerity
    Libya Three Years Later - Chaos and Partition
    Why Was Gaddafi Overthrown?
    Should Ukraine and West Accept De Facto Crimea Joining Russia? (2/2)
    Tony Benn Saw Socialism as the Culmination of Democratization
    Why Didn't Bush/Cheney Attack Iran and Can Obama Make and Sell a Deal? - Gareth Porter on Reality Asserts Itself (3/3)
    After Late Mayor Lumumba is Laid to Rest, What's Next for Jackson, Mississippi? (2/2)
    Crimea Referendum: Self Determination or Big Power Manipulation? (1/2)
    Sen. Graham: President Must Side with Openness About CIA and 9/11
    Manufacturing a Narrative for War - Gareth Porter on Reality Asserts Itself (2/3)
    Protesters Hit the Streets of Brooklyn to Demand $15 Minimum Wage
    Hammer: 'Moral Bankruptcy' Behind Massive GM Recall
    White House Withholds Thousands of Documents from Senate CIA Probe
    I Grew Up Believing in Time Magazine's Version of America - Gareth Porter on RAI (1/3)
    Western European Banks Vulnerable to Ukrainian Sovereign Debt Crisis
    TRNN Debate: What's Driving Inflation in Venezuela? (2/2)
    CIA vs. Senate: Who Is Obama Protecting?
    Will Tipped Workers Get Excluded Again From Minimum Wage Hike?
    TRNN Debate: What's Driving Inflation in Venezuela? (1/2)
    After Late Mayor Lumumba is Laid to Rest, What's Next for Jackson, Mississippi?(1/2)
    TRNN Replay: A Look at Who's Poised to Become No.2 at the Fed
    How Right-Wing Nationalism Rose to Influence in Ukraine (2/2)
    Netanyahu Attacks Boycott As Campaign Enters New Phase
    Moving Towards a Police State - Michael Ratner on Reality Asserts Itself (7/7)
    Fighting Reagan's Secret, Illegal Wars - Michael Ratner on Reality Asserts Itself (6/7)
    Puerto Rican Independence Movement and Cuba Further Radicalized Me - Michael Ratner on RAI (5/7)
    The Butcher of Attica - Michael Ratner on Reality Asserts Itself (4/7)
    MLK and a Radicalizing Moment in American History - Michael Ratner on Reality Asserts Itself (3/7), Real News Network, Real News, Real News For Real People, IWT are trademarks and service marks of IWT.TV inc. "The Real News" is the flagship show of IWT and Real News Network.

    All original content on this site is copyright of The Real News Network.  Click here for more

    Problems with this site? Please let us know

    Linux VPS Hosting by Star Dot Hosting