Governments growing nervous at increased social tensions

Tue, Feb 3, 2009, 00:00

EUROPEAN DIARY:A continent-wide sense of injustice leaves Europe vulnerable to an explosion of unrest

ONE MILLION workers on the streets of France, wildcat strikes in Britain, rioting in Greece and the Baltic republics and sit-in protests by glass workers in Waterford: social unrest is spreading throughout Europe and no one knows where it is all going to end.

Last week the worst economic recession in at least 30 years claimed its first political victim in Europe when on Monday Iceland’s beleaguered prime minister Geir Haarde tendered his resignation following weeks of street protests. The collapse of the country’s banking system, which has shredded the value of the krona, driven interest rates to 18 per cent and unemployment to 8 per cent, put paid to his Conservative-led coalition.

By Thursday one million workers were protesting on the streets of Paris, angry that they are losing their jobs while bankers are being bailed out. “I’m tired and frozen after waiting half an hour on the platform,” commuter Sandrine Dermont said. “But I’m prepared to accept that when it’s a movement to defend our spending power and jobs. I’ll join the street protests during my lunch break.”

Workers at Waterford Crystal tapped into the continent-wide mood of defiance, staging a sit-in protest when a receiver announced an immediate halt to all manufacturing. Many must be asking why the Government is giving billions in taxpayers’ money to save Anglo Irish Bank while turning down a request for a State-backed loan for Waterford.

As more families in Europe face hardship the sense of injustice is growing. Words coined during the dark days of the 1930s such as “bankster”, which is a mix of banker and gangster, are suddenly back in vogue as a younger generation of Europeans used to more than a decade of consumerism gets its first taste of dole queues.

“There’s a big scandal . . . governments are now trying to save banks through injecting capital and save companies by giving credit guarantees, and this will translate into higher public deficits,” says Ronald Janssen, economist with the European Trade Union Confederation.

“This is not sustainable for public finances, so you have to cut social security, which will lead to an attack on social Europe,” he says, warning that the potential result is an “explosion of social unrest” and the de facto end of social Europe.

And it’s not just the trade unions that are warning of the danger of social unrest. The IMF, which has already helped bail out Iceland, Latvia and Hungary with emergency loans, warned back in December there was a dire need for governments to take action on the economy to stop trouble spilling on to the streets.

“If we are not able to do that, then social unrest may happen in many countries – including advanced economies,” said IMF managing director Dominique Strauss-Kahn, who warned that violence could break out if the global financial system was not remodelled to benefit everyone.

His warnings have turned out to be prescient. Widespread rioting broke out in Greece in December when a 15-year-old boy was shot dead by police. Students and young people went on the rampage for several days, citing lack jobs and opportunities for their anger. In January, riots broke out in Latvia and Lithuania, which have been hit hard by the economic slowdown. Later, a Bulgarian demonstration against corruption held in front of the parliament in Sofia descended into violence.

“Serious social unrest is probably more likely to occur in new member states in eastern Europe where political systems are less mature and there is often popular discontent due to corruption,” says Daniel Gros, director of the Centre for European Policy Studies, who also notes that some Europeans, such as the French, are quicker to protest than others.

The sight of typically more restrained British workers taking part in wildcat strikes is another sign that this is no mere economic downturn. Contractors brandishing placards with the message “British jobs 4 British workers” in protests against the use of foreign workers at an oil refinery in Lincolnshire showed that an upsurge in anti-immigrant feeling could take hold.

EU governments are getting increasingly nervous at the rise in social tensions and in Brussels there are fears the European elections in June will see a large anti-establishment vote that could see xenophobic and extreme MEPs elected. Employment commissioner Vladimir Spidla said last week he is investigating how the EU budget could be used to alleviate the crisis. One way could be to expand the scope of the EU globalisation fund, which provides funds to help retrain workers; another, to allow faster access to EU social funding.

But most of the policy levers to deal with the crisis and provide a social security safety net lie in the hands of national politicians. The €2 trillion question (the IMF’s latest estimate of the bad debts held by banks) is whether policymakers can find a plan that steers a course towards economic recovery while restoring a sense of fairness to life. If they fail Iceland’s Geir Haarde will certainly not be the last political victim of this economic recession.