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The political consequences of the economic crisis

Resolution 1745 (2010)

Parliamentary Assembly
Assembly debate on 23 June 2010 (24th Sitting) (see Doc. 12282, report of the Political Affairs Committee, rapporteur: Mr Zingeris; and Doc. 12299, opinion of the Committee on Economic Affairs and Development, rapporteur: Mrs Lilliehöök). Text adopted by the Assembly on 23 June 2010 (24th Sitting).
1. The history of Europe and the world has shown that an economic crisis may have grave consequences at many different levels. The Parliamentary Assembly discussed the consequences of the global financial crisis in January 2009 and the social impact of the economic crisis, the impact of the global economic crisis on migration in Europe, women and the economic and financial crisis and investing in family cohesion as a development factor in times of crisis in April 2010.
2. Already in January 2009, Resolution 1651 (2009) on the consequences of the global financial crisis hinted that the present crisis “could possibly threaten to undermine the very foundations of democracy” and proposed to remind governments “that despite financial difficulties, citizen’s social, economic and human rights must be safeguarded”. Unfortunately, one and a half years later, many Council of Europe member states are no longer in a position to stimulate the economy, “notably by increasing aggregate demand in order to boost consumer spending, through greater public authority investment in infrastructure and housing”.
3. On the contrary, some governments are bound to reduce spending and therefore they will need one or more of the following measures: reduction of public investment, freezing or reduction of the public service labour force, tax increases, an increase in the retirement age and freezing or reduction of salaries and pensions. Several governments have already announced cuts in public sector salaries. The social consequences will certainly be much more severe than those foreseen in previous Assembly debates. We already deplore the loss of three lives in Athens at the beginning of May.
4. The global economic crisis which confronts Europe today is extremely serious and challenges us all at not only national but also at European and international levels. It is therefore very important that European politicians work together to resolve the crisis on the basis of an equitable sharing of the burden among their population.
5. This crisis provides parties and movements of the extreme left and right with the opportunity to blame failures on mainstream parties in order to gain more popularity for themselves. It is to be regretted that in some countries mainstream parties adopted extremist language.
6. Recent national and European elections do not seem to confirm the fear that dissatisfaction with mainstream parties would lead to massive votes for extremist parties and movements. Extremist parties remain, however, a concern, in particular in the circumstances where populations refuse to accept the austerity packages imposed upon them.
7. The Assembly recalls that a common currency (a monetary union) implies a common monetary policy and notes that such policy does not work in the long term when there are wide differences in economic, budgetary and fiscal policies among the members of the monetary union. It regrets that the stability and growth pact which accompanied the introduction of the euro was not rigorously observed by many of the states to which it applied.
8. The Assembly welcomes the announcement on 10 May 2010 of a package of emergency measures amounting to 750 billion euros – of which 250 billion from the International Monetary Fund – “to defend the euro and eurozone economies”.
9. The ongoing crisis has shown that we are still very far from a Europe without dividing lines: among the member states of the Council of Europe, there are members and non-member states of the European Union. And among the European Union member states, there are those in the eurozone and those outside of it. It is worrying to see the difference in the treatment of each category.
10. The Assembly therefore recommends that member states:
10.1 adopt a less national policy and a more co-ordinated, unified and coherent European reaction to face the global economic crisis;
10.2 pay more attention to the fight against corruption inside state institutions;
10.3 reinforce the democratic process within the European Union through the active involvement of national parliaments.
11. The Assembly recommends that national parliaments:
11.1 assess much more effectively the short-, medium- and long-term economic consequences of legislation, with a particular emphasis on national budgets;
11.2 monitor closely the reform process of economic and financial governance.
12. Finally, the Assembly welcomes the initiative of the Political Affairs Committee to organise, together with the Committee on Economic Affairs and Development, a hearing on the political impact of the economic crisis on society, with the participation of the Council of Europe Commissioner for Human Rights.