Briefing journalists in Brussels on Thursday (14 July), László Andor outlined his policy objectives for the Polish EU Presidency, but also delivered a sharp rebuke to the policy of implementing austerity measures in light of the worsening debt crisis.
He said that the crisis was presenting policymakers with a dilemma, forcing them to choose between debt financing and financial regulations on the one hand, and social and employment policies on the other.
Austerity is 'not working'
The former socialist government adviser and economist said it was clear that debtor countries cannot shoulder the cost of restructuring alone, adding: "This approach is unsustainable and implies that the individual member states can get out of this crisis simply by imposing austerity. This is clearly not working."
Andor said that the strategy might have worked if Europe had returned to growth, bringing investor confidence rapidly in its wake. But his clear message was that the austerity programmes – which Economic Affairs Commissioner Olli Rehn advocated forcefully – are not delivering. He said: "Ultimately expecting austerity to work on its own is not possible."
The EU and IMF warned Greece to enact its five-year austerity plan – with €28.6 billion in savings, and key implementing laws for structural reforms and state asset sales – in order to secure a €12 billion slice of aid this month.
Comments precede expected crisis meeting
There is a need to examine "both sides of the coin," according to Andor, who was referring to need for debt to be shared more equitably in exchange for demands for member states to carry out austerity reforms. He said: "At this point we are not balanced and we are far from a full solution."
The intervention is in line with Andor's socialist background and his brief as the commissioner for social affairs and inclusion, but it comes at a sensitive time as eurozone leaders prepare for a summit dedicated to the Greek debt crisis on Thursday (21 July).
Eurozone leaders are expected to decide how to involve banks and private investors in a "haircut" on bond yields in order to stem the lack of market confidence in Greek gilt-edged stock.
Jeremy Fleming
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