Eurozone Saga: general strike in Greece, violence in Spain

Greek trade unions have brought the country to a standstill in a general strike while anti-austerity violence erupts in Spain.

by Michael Northcott
Last Updated: 19 Aug 2013

The former British prime minister, Gordon Brown, yesterday described the eurozone as being in a ‘new tranquillity period’ thanks to the ECB’s plans for calming financial markets. He obviously hasn’t been to Athens or Madrid recently. Today, millions of workers throughout Greece are staging a 24-hour walkout in protest against further public spending cuts of around £9bn. Public transport, schools, hospitals, banks, historic sites and even shops have shut down for the day and protests are breaking out everywhere.

The cuts are part of the deal the country has done with Europe to get its hands on another bailout and avoid bankruptcy, which it says could be just weeks away without more money. This comes just days after European financial inspectors found a €20bn black hole in Greece’s public purse, which no-one previously seemed to know about. The troubled state had already been trying to get negotiate more time to meet the conditions of its bailout agreement, to the chagrin of the ‘stump-up-the-cash’ eurozone members like Germany. Another bitter pill for Merkel to swallow…

Meanwhile, similar financial woes in Spain have resulted in violent mass protests in Madrid. The country's central bank today announced that it expects GDP to contract a further 0.4% for the third quarter of 2013. Snaps of bloodied demonstrators and aggressive-looking police have been on the airwaves since the violence erupted yesterday. It all started when thousands of people peacefully marched towards the Spanish parliament demanding that the whole government resign office. Predictably, the crowd got angry and tried pulling down the barricades surrounding the parliament building. Police allegedly fired rubber bullets into the melee and batons were used to subdue some of the more ‘impassioned’ protestors. 

Why a sudden flare in Madrid? Well, the country has seen dozens of protests in the last 12 months, but it is now facing a new round of austerity measures which were due to be unveiled on Thursday. It is thought that the government is trying to get more cuts through quickly so that better terms can be agreed with the ECB on its bond-buying scheme. The ECB reckons that it can artificially keep borrowing costs low for Spain if it gives a guarantee to buy as many bonds as required to keep yields low. 

But even setting aside the austerity issues for a moment, the Spanish economy is in dire straits. First those new GDP figures. Second, the country is already in a deep recession, and unemployment is at its highest level since the 1970s, with 25% of the able population out of work. Youth unemployment is touching 50%. Pile in a load of austerity cuts on top of this, and it’s no wonder the people are angry. 

How the PIIGS countries can get out of this mess is anyone’s guess. Governments throughout Europe have been trying weird and wonderful ways to put out the flames for three years now. Something tells MT that another trillion euros of bailout money still won’t do the trick. The saga continues…

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