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| Sort out eurozone crisis, world tells Europe's leaders | Sort out eurozone crisis, world tells Europe's leaders |
| (6 months later) | |
| That sharp intake of breath you can hear? It's the world running out of patience. Frustrated by years of euro-muddle, exasperated by the deepening crisis and worried at the knock-on effect on trade, growth and prosperity, leading politicians and business figures from east and west are adopting an increasingly critical tone towards Europe's handling of its debt-encrusted economy. | That sharp intake of breath you can hear? It's the world running out of patience. Frustrated by years of euro-muddle, exasperated by the deepening crisis and worried at the knock-on effect on trade, growth and prosperity, leading politicians and business figures from east and west are adopting an increasingly critical tone towards Europe's handling of its debt-encrusted economy. |
| To coincide with Thursday's crucial EU summit in Brussels, a range of powerful figures from business, finance and politics in China, Brazil, the US, Argentina, Japan and Mexico told the Guardian and its partner papers in the Europa project that time is running out for Europe. What the world wants now is decisive action. | To coincide with Thursday's crucial EU summit in Brussels, a range of powerful figures from business, finance and politics in China, Brazil, the US, Argentina, Japan and Mexico told the Guardian and its partner papers in the Europa project that time is running out for Europe. What the world wants now is decisive action. |
| As finance minister in one of the world's most perky economies, Brazil, Guido Mantega has perhaps more right than most to criticise. Brazil is eager to avoid Europe tilting the world into a deepening recession, which may harm Brazil's commodity-fuelled boom. | As finance minister in one of the world's most perky economies, Brazil, Guido Mantega has perhaps more right than most to criticise. Brazil is eager to avoid Europe tilting the world into a deepening recession, which may harm Brazil's commodity-fuelled boom. |
| "2012 is a lost year for Europe, that's a fact. The objective now is to keep the situation from getting worse over the next few years," Mantega told the Europa group of papers. He is particularly impatient with the German position, which, he says, has elevated the interest of German savers over the wellbeing of most of Europe. | "2012 is a lost year for Europe, that's a fact. The objective now is to keep the situation from getting worse over the next few years," Mantega told the Europa group of papers. He is particularly impatient with the German position, which, he says, has elevated the interest of German savers over the wellbeing of most of Europe. |
| "Germany is looking in only one direction," Mantega says. "Its proposal of economic austerity seems logical vis-à-vis German voters, who don't want to foot the bill for other countries or pay for their lack of responsibility. However, the Germans will lose too if Spanish banks go bankrupt. The Spanish and Portuguese governments are making big efforts. Germany ought to be more flexible when it comes to helping those governments, instead of putting a knife to their throats." | "Germany is looking in only one direction," Mantega says. "Its proposal of economic austerity seems logical vis-à-vis German voters, who don't want to foot the bill for other countries or pay for their lack of responsibility. However, the Germans will lose too if Spanish banks go bankrupt. The Spanish and Portuguese governments are making big efforts. Germany ought to be more flexible when it comes to helping those governments, instead of putting a knife to their throats." |
| China is also preoccupied about its own economic prospects when its biggest consumer market is contracting sharply. In an interview in Beijing, a well-connected former diplomat, Cui Hongjian, said there was a measure of exasperation among the Chinese leadership at the dilatory response in Brussels to the crisis. The Chinese, he says, "ask why Europeans argue so much but do not take action". | China is also preoccupied about its own economic prospects when its biggest consumer market is contracting sharply. In an interview in Beijing, a well-connected former diplomat, Cui Hongjian, said there was a measure of exasperation among the Chinese leadership at the dilatory response in Brussels to the crisis. The Chinese, he says, "ask why Europeans argue so much but do not take action". |
| "China must do something to stop this decline in its exports," he says, adding that Chinese leaders have two frustrations: that the debt crisis has almost totally overwhelmed European policy-making, and that as ever there is no single European entity that China can do business with. | "China must do something to stop this decline in its exports," he says, adding that Chinese leaders have two frustrations: that the debt crisis has almost totally overwhelmed European policy-making, and that as ever there is no single European entity that China can do business with. |
| As a result, Beijing has begun stepping up bilateral relations with individual countries, particularly Germany. "I think that if there was only one person for China to deal with, it would be more efficient." | As a result, Beijing has begun stepping up bilateral relations with individual countries, particularly Germany. "I think that if there was only one person for China to deal with, it would be more efficient." |
| Another official, Jin Liqun, chairman of the China Investment Corporation supervisory board, said: "The way the eurozone has handled the debt-resolution issue has been more problematic. Too much time has been wasted on debates over the terms and conditions of piecemeal bailouts. Political leaders have been digging in on their own agendas, with their objectives pulling in different directions." | Another official, Jin Liqun, chairman of the China Investment Corporation supervisory board, said: "The way the eurozone has handled the debt-resolution issue has been more problematic. Too much time has been wasted on debates over the terms and conditions of piecemeal bailouts. Political leaders have been digging in on their own agendas, with their objectives pulling in different directions." |
| For the Mexican Carlos Slim, the world's richest man, cash-strapped governments need to get to grips with unaffordable welfare bills and lengthening lifespans: "There are places where people are retiring at 60 when life expectancy, for somebody who gets to 60, is 85 or more. There are universal health-provision programmes that are inefficient and often open to tourists. The retirement age should be higher … In the service societies of today, where physical strength and physical work is less important than experience and knowledge, it is sad that a person stops work at 60 when they are in their prime." | For the Mexican Carlos Slim, the world's richest man, cash-strapped governments need to get to grips with unaffordable welfare bills and lengthening lifespans: "There are places where people are retiring at 60 when life expectancy, for somebody who gets to 60, is 85 or more. There are universal health-provision programmes that are inefficient and often open to tourists. The retirement age should be higher … In the service societies of today, where physical strength and physical work is less important than experience and knowledge, it is sad that a person stops work at 60 when they are in their prime." |
| Slim, who recently increased his exposure in Europe with stakes in phone companies in the Netherlands and Austria, calls for a revolution in working hours such that people don't work eight-hour days for five days a week, but three days of 11 hours each. He says welfare should be tightly aligned with engagement in retraining programmes and that states should drum up cash through privatisations. | Slim, who recently increased his exposure in Europe with stakes in phone companies in the Netherlands and Austria, calls for a revolution in working hours such that people don't work eight-hour days for five days a week, but three days of 11 hours each. He says welfare should be tightly aligned with engagement in retraining programmes and that states should drum up cash through privatisations. |
| "What Europe should do is sell assets. The state does too many things. It should do two things. Sell assets, to reduce debt and deficits, but also invite the private sector … to make the investments the state no longer has any business doing … motorways, even hospitals and schools can all be financed with private money." | "What Europe should do is sell assets. The state does too many things. It should do two things. Sell assets, to reduce debt and deficits, but also invite the private sector … to make the investments the state no longer has any business doing … motorways, even hospitals and schools can all be financed with private money." |
| Roberto Lavagna is a man who knows a thing or two about a crisis and how to overcome it. He was the economy minister who helped Argentina pull out of its own debt crisis a decade ago. For him, it makes no sense for Europe to be permanently flushing resources through banks, while consumers despair. | Roberto Lavagna is a man who knows a thing or two about a crisis and how to overcome it. He was the economy minister who helped Argentina pull out of its own debt crisis a decade ago. For him, it makes no sense for Europe to be permanently flushing resources through banks, while consumers despair. |
| "I'm amazed at the enormous sums of money they give to banks, and I wonder: why not help out consumers who are in debt? Because rescheduling loans, lowering interest rates etc will eventually help consumers regain confidence, rekindle demand and get the economy going." | "I'm amazed at the enormous sums of money they give to banks, and I wonder: why not help out consumers who are in debt? Because rescheduling loans, lowering interest rates etc will eventually help consumers regain confidence, rekindle demand and get the economy going." |
| Lavagna is unconvinced by austerity. "The cuts destroying people's purchasing power are recessionary and don't yield results in terms of fiscal equilibrium," he says. "Germany directed this current, backed moreover by an EU government in Brussels with no power or influence, and an International Monetary Fund that had always supported this blueprint. That was the blueprint which they offered Argentina and which we rejected in 2002." | Lavagna is unconvinced by austerity. "The cuts destroying people's purchasing power are recessionary and don't yield results in terms of fiscal equilibrium," he says. "Germany directed this current, backed moreover by an EU government in Brussels with no power or influence, and an International Monetary Fund that had always supported this blueprint. That was the blueprint which they offered Argentina and which we rejected in 2002." |
| Michael Bloomberg, the billionaire mayor of New York, says that states have to balance budgets somehow. "You could make the case that David Cameron is doing what's right, that he is addressing the issues. I don't know if he is right or wrong, but he is showing courage to stand up and do that. | Michael Bloomberg, the billionaire mayor of New York, says that states have to balance budgets somehow. "You could make the case that David Cameron is doing what's right, that he is addressing the issues. I don't know if he is right or wrong, but he is showing courage to stand up and do that. |
| "Can you do the same thing in Spain with an enormous unemployment rate? Can you do the same thing in Greece or Italy, where the number of people that pay taxes are relatively low? In America, everybody pays taxes. There may be a handful of people that cheat, but everybody files a tax return, and so if only a small percentage of the people don't, it is easier to enforce the law because it is manageable to go after them. If 90% of the people don't pay their taxes, where do you start?" | "Can you do the same thing in Spain with an enormous unemployment rate? Can you do the same thing in Greece or Italy, where the number of people that pay taxes are relatively low? In America, everybody pays taxes. There may be a handful of people that cheat, but everybody files a tax return, and so if only a small percentage of the people don't, it is easier to enforce the law because it is manageable to go after them. If 90% of the people don't pay their taxes, where do you start?" |
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