Austerity Measures Are Not the Solution to the EU Debt Crisis

The Economic and Financial Affairs Council at LIMUN 2013 agreed that the Eurozone crisis needs global solutions. Its consequences spread beyond the borders of the EU and affect an interconnected worldwide market. The most likely solution to solve this problem is by global cooperation and trade. Additionally, there is a need for urgent implementation of the fiscal union.

The EU debt crisis is an international concern. As the delegate for China Mattias Verbergt pointed out “it is about all nations fighting against time” to solve a problem that affects everyone. The current financial market is so integrated that all nations feel the economic and financial consequences of the Eurozone. For example, India is a major trading partner of the EU and has been directly affected by the Eurozone crisis.

There are other alternatives

Greece is one of the countries most strongly affected by the crisis. The solution depends on what changes are made to the financial system. The delegate of Greece pointed out that “Alternative solutions have to be explored. Austerity measures will only cause more social unrest”.

Delegate of China

Delegate of China

The delegates from Saudi Arabia and China expressed their concerns on the situation saying that “austerity simply does not work for the EU” and that “these measures are not the only way”. Stimulating measures are necessary to revive the Euro currency.

The United Nations must come up with specific solutions that will not include the disintegration of the single currency. The delegate for Greece explained clearly that the 170% GDP in the country must be addressed, and if not, “Greece will be more like to leave the Eurozone”. Austerity measures have been implemented in Greece without any positive results. However the delegate for Greece acknowledged that “the EU has supported Greece with financial assistance of €34.4bn in the second bailout, and this shows the commitment of the EU for Greece to remain part of the Union”.

More financial investment and integration

The Eurozone is facing a double-dip  recession, where the Southern European countries of Greece, Italy, Portugal and Spain are the worst affected. However, there are some positive examples too. The delegate for Italy said that the country won't ask for a bailout from the European Stability Mechanism (ESM). The delegate of Germany also stated: “Germany does not believe in the EU failing. We do not support austerity measures only, but we need control and supervision of member countries in order to see growth”.

Delegate of Germany

Delegate of Germany

All countries agreed that international cooperation is needed to face the debt default of the EU, and that protectionism and austerity are not the only solutions. What is needed is more economic and financial integration within the EU and international trading and investments with overseas countries.

Spain will give you reasons for coming back

“If you had to be reborn anywhere in the world as a person with artistic talent and creativity, 

you would want to be Don Quixote”

“In a village of La Mancha, the name of which I have no desire to call to mind...” was the place where  the famous writer Miguel de Cervantes, the creator of “Don Quixote”, was born. In this Southern country, where the sun shines 13 months a year, is where the film director Pedro Almodóvar became recognized to capture Spanish cinema in a so peculiar way.

There was also another story, as beautiful as these ones, about an American guy and a Spanish girl who met one by chance in the North of Spain, specifically in Santander. She was from Alicante and went there for an English course. He was the English professor and would live there for a while. Something special happened that day in the North of Spain, but it was too difficult to bet for it. There were many obstacles between them, however, they both fall in love and they decide to be two weeks together travelling around the country that made them fall in love.

Santander 

Santander

 They both had only a week together, what they spent it enjoying the beauty of Santander, its green cliffs next to the Bay of Biscay and the Royal Palace of La Magdalena, once the residence of Alfonso XIII, King of Spain from 1886 until 1941. After it, She had to go back to her city, in the south east of Spain, and they might not see each other again. However, the week after that, it was the 20th of June when the main festivity in Alicante begins, the hogueras. He had never heard about a tradition where people build a monument and during four days there are fireworks and firecrackers in the street, along with music and parades, so he had an excuse to go there and visit her. They stayed together until the 24th of June, when the monument is set on fire on the night of San Juan.

Nevertheless, he had to move to work in Cuenca, in Castile-La Mancha, closer to Alicante. Cuenca, a city on the inner plateau of Spain where the hanging houses are, the only remaining samples of this type of building. He promised her that if she went to Cuenca to visit him, he would show her on of the oldest and the most beautiful villages in Spain, Albarracín, in the province of Teruel, part of the autonomous community of Aragon. He took her hiking and climbing on the mountains until the birth of the Tagus River in the Sierra de Albarracin.


Something else was born there, on the banks of the river Tagus, but they only had two weeks left before he went back to the States. So, why not steal the time and create a secret between she, he and Spain. The next day, they were driving aimlessly, only with a map of Spain and some recommendations of places to visit.

San Sebastián

Zaragoza

Spain, a country to discover together

After a couple of hours driving, they stopped in Zaragoza, the capital of Aragon. They had something to eat in the Pillar square, admiring the Pillar´s church on the banks of the river Ebro. Then, they continued their trip to Pamplona, capital city of Navarre, where at that time of the year were the San Fermines or bull running festivity of the city. The day after, they start driving to the Basque country, specifically to San Sebastian, city that will be the European Capital of Culture in 2016 (along with Wrocław in Poland).

For the next destination, they wanted to explore the interior of Castile- Leon, its meadows, its castles and, of course, Burgos and Salamanca´s cathedrals. After this walk through history, there was one more stop before the end of the trip; Segovia. There, they got into the history of the Catholic kings of Spain with the famous Alcázar, they ate its main dish of pork, cheese and cured sausages and enjoyed its wine, before arriving to the airport, at the capital of the country, that would keep them apart.

Segovia

Salamanca

After this short ten days, they arrived to Madrid where their destinies would be separated. But, there were still some hours left, so they decided to go to the centre of the city and walk on the Retiro park and perhaps see the Prado museum. But then, it was time for him to leave. To leave the country he loves, and the woman with whom he shared and discovered it. She left him in the airport and started driving back to Alicante and her Mediterranean sea, always remanding those cities, those secret places on Spain that brought them together the love.

They know there are many beautiful places in Spain, but they were more than that, they were special cities to them, because now those places were theirs. This romance between three is still as alive as the first day, and every now and then he went back to Spain, to explore with her these exclusive and beautiful places of the warm southern European country. And every time, in a new city around Spain, he fell in love again to this country, and its woman.

Alicante

Alicante provincia

Opportunities behind adversities
This was a true story that at the beginning no one invested a penny on it. Nobody thought it was worthy, “to complicate it”, they said, “to many problems”, or “to weak to resist the circumstances”... That was what people were saying when they said they wanted to be together. What would happen with the distance, and the age difference? But the couple did not care, because they knew that they wanted to be together and they believe Spain will bring them what they needed. Maybe, they will need some time to be together but, as they always say, if there is a will, there is a way.

Maybe this can also be applied to other areas, as the finances. Give it some time, believe on it, and Spain will recover. Perhaps, it also needs somebody else who loves it too, and build a new momentum with it...

Can the 2013 achieve the economic targets?

After more than four years fighting against the economic recession, it seems that 2013 can be the turning point for some countries. United Kingdom is expected to get out of the recession this new year, as forecast announces an economic growth of 1.2% of Gross Domestic Product (GDP). However, the hit European countries, in which Spain is part of, will continue into stagnation. Spanish prevision of growth in the next year is still downturn, with a minus 1.2% decrease of the GDP in 2013.

UK´s economic strategy “is focussed on reducing the deficit, restoring stability, rebalancing the economy and equipping the UK to compete in the global race”, as the Chancellor of the Exchequer, George Osborne, explained in the Autumn Statement to Parliament on 5 December 2012. On the other side, Spanish austerity measures have only contributed to increase unemployment (up to 25%) and to provoke more social unrest.

However, it it necessary to remark that neither UK nor Spain are likely to kept their forecasts of deficit reduction in the year that has just entered. The objective of Spanish deficit was 6.3% of GDP at the end of 2012, “but it could be (above that),” as the Bank of Spain governor, Luis Maria Linde, said last December 2012; although estimations yet predict Spanish deficit to drop to a 4.7% of GDP in 2013. On the other side, UK will also miss its deficit target from the 2013-2014 financial year, as the Autumn statement announced an escalation to 5.9pc of GDP, or £98bn, as Mr. Osborne indicated (hm treasury, Dec 5th, 2012). This data would indicate that the UK deficit next year could be higher than the Spanish's.

Therefore, new cutting measures will be necessary to reduce deficit and the extensive public debt. UK budget cuts are not significant, only 1.5% real cuts during 2012, if compared with Spanish ones where the most striking difference is that Spain does not include any measure to support growth as UK has setting up. For example, UK new policy includes increasing funding for UK Trade and Investments or helping smaller and medium-sized businesses access finance and support “from £25,000 to £250,000 for two years” as Mr. Osborne set out in the Annual Autumn Statement. This strategy can probably be the best solution to alleviate the financial situation; something that the European Union also instituted in its programme 2007-2013 “new funds, better rules”.