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18 Jan, 2011 08:47

Europe cannot afford Euro – MEP

Europe cannot afford Euro – MEP

Eurozone finance ministers are meeting in Brussels to discuss whether to boost the EU bailout fund which was only set up last year.

The European Commission and European Central Bank want to widen the fund, to give it more flexibility if larger Eurozone members like Spain need help. Belgium's Finance Minister wants the pot doubled to 1.5 trillion euros. However, Germany, the biggest Eurozone economy, has so far ruled out any substantial increase – a reflection of the major tensions within the Union.

"Failure from the very beginning"

Nigel Farage, a member of the European Parliament and leader of the UK Independence Party, says the whole idea of the Eurozone was a failure from the very beginning:“I think what they are doing here is they’re reinforcing failure. At the end of the day, countries like Greece, and Portugal, and Ireland, and possibly even Spain should never have joined the euro in the first place. They are now trapped inside an economic prison, with the whole set of policies that do not suit their economic circumstances. And I think the more we build up the bailout fund, the more, in effect, we are pouring good money after bad. And this really is a tragedy.”In view of all that, Nigel Farage called Estonia’s decision to join the Eurozone in 2011 “the most incredible decision”:“The Estonian decision is quite extraordinary. It’s rather like boarding the Titanic after it’s hit the iceberg.”

Farage echoes other experts by pointing out that the people were the last to be asked when decisions were being made:“If at any point in time the German people would be asked initially whether they wanted to give up the Deutschemark they would’ve said ‘no’, and if you ask the German people now, do they want to pick up a liability that in financial terms will be six times bigger than the liability they picked up when Eastern Germany joined them 20 years ago, the answer again will be ‘no’.”“So, my guess is that the German finance minister, the German chancellor will make skeptical noises, will voice a bit of disagreement, but in the end my guess is they will go along with it, because they are part of this European political class that have created this monster called the euro. And in the end they are going to do whatever they can to try save it,” he added.Farage believes that the decision to increase the bailout funds and buying their own debt is nothing but “a lunatic policy” carried out by European governments.“They will go on doing this. They will do everything they can to keep this monetary union together. But in the end the fundamentals will prevail, and it’s not going to work,” he said.“If they hold the Eurozone together then the conditions in those countries are, frankly, are going to get worse. And what it really needs is a frank assessment,” Farage added.

"Paying the price"

Morten Messerschmidt, Danish MEP, calls the bailout “a poor project from the very beginning” for which the Eurozone is now paying the price.The EU Executive Commission proposed the fund be increased, saying at present it will not be able to provide a loan if struggling Eurozone members like Spain and Portugal need help. But Morten Messerschmidt does not view the fund as a solution to the current problems of the union.“A bailout is always only a temporary solution, since it is a big cover-up for the lack of unity within the Eurozone. It’s evident that we have at least two different economic zones in the Eurozone. After ten years of different developments in interest rates, inflation, labour markets, economical reforms and so on, now the differences between these two zones are so big that it is heavily damaging the Southern European countries,” Messerschmidt explains.Messerschmidt believes that a common currency can exist only within an area which has the same financial policy. He describes today’s Eurozone as driven by Germany, so Southern European countries do not seem ready to reform their economies to the required level. People in Germany, on the other hand, do not wish to pay anybody else’s bills anymore.“The solution, obviously, is simply to rely on reality – to say we have two different economic zones in the EU, so we cannot have one currency. We should at least have two different currencies in the Eurozone, maybe, actually, sixteen as we had ten years ago”, he concludes.

According to Godfrey Bloom, Member of the European Parliament for the UK Independence party, nothing will save the euro because the single currency project was flawed from the start.“This whole concept is absolutely absurd. You cannot have one currency for 16 or 17 different economies. It certainly cannot work, it does not work,” he said. “The whole thing was ridiculous from the start and it is ridiculous now.”“Moreover, on the more serious note: a lot of very small people are going to be hurt by this and I think the people who drove this Eurozone project through should be criminally culpable and when this finally breaks, probably next year, I would like to see them go to prison,” Bloom added.