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9 Sep, 2010 06:37

“European monetary fund a good step towards EU govt” – economic historian

Award-winning British historian and economist Robert Skidelsky shared with RT his view on the economic crisis in Europe and why austerity measures will only make things worse.

Cutting spending to balance budgets is going to have a bad effect, Skidelsky believes.

“It is going to slow down the recovery. It might even lead to a double-dip recession, as it is called, when you actually go down again. So there are very dangerous times for the world economy over the next six months,” he said.

And add it to the fact that Europe is already much weaker than it was, the historian says.

“Europe has been very badly hit by the recession and it has got very high unemployment, but beyond that, I think, Europe is in decline. It’s weaker than it was. Its population is not expanding and others are, it has been affected by the rise of Asia and particularly the rise of China,” Skidelsky says. “If you think back to a hundred years ago, Europe was the center of the world. Now, of course, it is not, and it is much-much weaker than it was.”

At the same time, establishing a European monetary fund is a good idea, Skidelsky says.

“I think that’s the one good German suggestion that has actually emerged from the crisis, because it mobilizes some resources that can be brought to help weak countries in an emergency,” he says. “It’s rather like an original version of the IMF. You know, countries can borrow from the IMF on conditions. But of course it depends whether they [the European monetary fund] can mobilize the required resources on a permanent basis. They’ve done it on a temporary basis so far, and what conditions they attach to lending the money. If the conditions are too hard, then I think they can actually make matters worse. But it is a good step towards government of Europe.”

As for Russia-Europe co-operation in the security field, Skidelsky said that Russia is “a great asset for the European security system.”

“Russia should become part of the European security system. And the simplest way to have done that would have been for Russia to become a member of NATO, which is I think something that Putin wanted when he was president,” Skidelsky said. “As it is, Russia should become a much more effective part of the European security system and not be outside it. Russia has good military forces and they are becoming increasingly modernized.”

“President Medvedev has suggested a new security concept that would include Russia and we should take him up on that,” Robert Skidelsky concluded.