How does Europe’s crisis look through the eyes of an international aid agency?

September 12, 2013

     By Duncan Green     

Back in 1942, during World War Two, Oxfam came into existence to lobby the British Government to ease the allied blockade of Nazi-occupied Greece. 70 years and a European miracle later, might we be once again about to send aid teams to Athens? I’m sitting in Australia as I write this, and it feels like I can almost see Europe shrinking and sliding backwards.

An Oxfam report published today stands back and looks at the state of Europe, seen through the eyes of an international agency that hasEuro crisiswitnessed the impact of crisis and austerity in dozens of developing countries in recent decades. For Europeans, it doesn’t make happy reading.

This from the executive summary (and yes I have read the rest, at least in draft….):

“Europe has often seen itself as a place where the social contract balances growth with development. A place where public services aim to ensure everyone has access to a high-quality education and no one need live in fear of falling ill. A place where the rights of workers, and particularly of women, are respected and supported, and where societies care for the weakest and the poorest; where the market has been harnessed to benefit society, rather than the other way round.

However, this idyllic social model has been under threat for some time; income inequality was increasing in many countries even before the financial crisis began. Now, the European model is under attack from ill-conceived austerity policies sold to the public as the cost of a stable, growing economy, for which all are being asked to pay. Left unchecked, these measures will undermine Europe’s social gains, creating divided countries and a divided continent, and entrenching poverty for a generation.

The unprecedented bailout of Europe’s financial institutions may have saved its banking system, but it also significantly increased public debts. They assumed that austerity policies – singularly focused on balancing budgets and reducing deficits – would restore market confidence and ultimately lead to job creation and renewed economies. In most countries, this has not happened. After almost three years, austerity is failing on its own terms and continues to exact high social costs. The experiences of the UK, Spain, Portugal, and Greece shows that the harsher the austerity, the higher the increase in debt ratio. A blind focus on reducing debt above all else has ignored the fact that growth can still occur during relatively high levels of debt and that any new growth in the economy must be inclusive and for the benefit of all.

Austerity programmes implemented across Europe – based on short-sighted, regressive taxes and deep spending cuts, particularly to public services, such as education, health and social security – have dismantled the mechanisms that reduce inequality and enable equitable growth. The poorest have been hit hardest, as the burden of responsibility for the excesses of past decades is passed to those most vulnerable and least to blame. Now, leading proponents of austerity, such as the International Monetary Fund (IMF), are beginning to recognize that harsh austerity measures have not led to the expected results, and have harmed both growth and equality.

European nations are suffering record levels of long-term and youth unemployment, with a generation of young people facing years of joblessness to come. As the real value of average incomes continues to plummet, falling fastest in countries that have implemented aggressive spending cuts, even those in work can look to a future where they are significantly poorer than their parents. Almost one in 10 working households in Europe now lives in poverty.

EU protestsOxfam has seen the impact of austerity measures before.

In 2011, 120 million people across the EU faced the prospect of living in poverty. Oxfam calculates this could rise by at least 15 million, and by as much as 25 million, as a result of continued austerity measures. Women will be the hardest hit. All the while, the richest have seen their share of total income grow, as the poorest are seeing theirs fall. If current trends continue some countries in Europe will soon have levels of inequality that rank among the highest in the world.

Throughout Oxfam’s history it has campaigned not just to highlight poverty and suffering, but, just as importantly, to highlight the policies and politics that are creating this poverty. Oxfam can no longer stand by while such poverty and suffering are being created in Europe, and, through falling European aid budgets and lower consumer spending, all over the world.

The European experience bears striking similarities to the structural adjustment policies imposed on Latin America, South-East Asia, and sub-Saharan African in the 1980s and 1990s. Countries in these regions received financial bailouts from the IMF and the World Bank after agreeing to adopt a range of policies including public-spending cuts, the nationalization of private debt, reductions in wages, and a debt management model in which repayments to creditors of commercial banks took precedence over measures to ensure social and economic recovery. These policies were a failure; a medicine that sought to cure the disease by killing the patient.

As part of global civil society, Oxfam fought hard against these policies, which forced the pain of economic slowdown on to those least able to bear it. Structural adjustment policies led to stagnating incomes and rising poverty in many countries, scarring generations across the world. Poverty in Indonesia took 10 years to return to pre-crisis levels. In Latin America, the incomes of ordinary people were the same in the mid-1990s as they had been in 1980. Vital services, such as education and health, were cut back or privatized, excluding the poorest and particularly harming women. Meanwhile, the share of income of the richest in society increased rapidly.

In spite of this cautionary tale, austerity is being aggressively pursued in Europe, with scant regard for the lessons of the past. These lessons suggest a bleak future for Europe’s poorest people, and warn of the harmful impacts for society as a whole.


An additional 15 to 25 million people across Europe could face the prospect of living in poverty by 2025 if austerity measures continue. It could take between 10 to 25 years for poverty to return to pre-2008 levels in Europe.

It does not have to be this way. Oxfam calls on European governments to do more than merely adjust existing austerity measures.

European governments must:

  • Invest in people and economic growth:
  • Invest in public services
  • Strengthen institutional democracy
  • Build fair tax systems

Oxfam is proud to stand with civil society in envisaging a new model of prosperity built on social justice and environmental sustainability.”

Glad we’re saying this …..

You can read the full report at: