EU bailouts impoverish small member states
29 Jul, 2011 05:23
Europe’s small countries feel their economies are being crushed under the weight of the euro currency crisis and bailouts for eurozone member states needing to be paid for.
One of the poorest EU countries, the Republic of Slovakia, is feeling the pinch of the changed rules, with euro membership failing to live up to its promises and pressure from the EU to participate in a second bailout, meaning their money could soon be going to Greece.“I’ll tell you what joining eurozone brought: responsibilities but no benefits,” complains one Slovakian pensioner.In fact Slovakian pensions are significantly lower than those in Greece. At a homeless shelter in Slovakia, people can barely cover their food costs with the money they receive – and still they are forced to carry the weight of the EU bailout.Charity worker Radovan Gumulak says “We now have to deal with homelessness, we have to reform our pension system, our healthcare system. There’s never enough money.”But back in 2009, when Slovakia joined the eurozone there were such high hopes.“It was a kind of prestige to be the first one amongst Hungary and Czech Republic, Polish people, to be the first one from Central Europe to be in this euro club,” analyst Juraj Karpis from the Institute of Economic and Social Studies confesses.But the eurozone it seems is not all it was cracked up to be.“As we joined the eurozone, there was the Lisbon Treaty saying the debts of one country are the liability of just this one country. But in May 2010, the rules changed dramatically,” Karpis complains. Those left out of the eurogang may well be breathing a sigh of relief nowIn fact neighboring non-euro countries have felt the benefits, with Slovak shoppers heading to their checkouts in a bid to escape the euro.Just across the border from Slovakia to the Czech Republic there are superstore outlets that are doing a booming business, with more and more people making the regular journey to do their shopping because the prices there are so much cheaper.With people shopping outside the country, Slovakia’s retail prices have fallen dramatically, while the relatively high prices from the value of the euro mean the tourism industry has been hit hard too.Certainly not the results hoped for when they first joined up.But every club has its leaders and what they say apparently goes, even if they are the ones who got you into trouble in the first place.“The ECB (European Central Bank ) created this illusion that all the countries in the eurozone are homogeneous, that the Greek bonds are just as good as the German bonds, so this illusion made it possible for Greece to borrow so much money,” Juraj Karpis reveals.Slovakia may be contributing this time, but it has left many of those at first so eager to join the eurogang feeling they are now simply being pushed around.