News / Europe

Europe Struggles to Restore Confidence in Troubled Economies

Al Pessin

Greece named a new prime minister Thursday, and Italy is planning to do the same fairly soon, as European leaders move to regain the confidence of financial markets and to ensure that the region’s economic crisis does not get any worse.

Greece chose economist Lucas Papademos to head its interim government, with the goal of getting the tough conditions of the European financial rescue package approved.  

Italy’s embattled Prime Minister Silvio Berlusconi is also expected to give way to an interim government, perhaps also to be led by an economist.

The goal is to restore confidence in the two troubled economies and their leadership, and to stabilize financial markets, in the hope of avoiding the kind of dire consequences highlighted by headline writers in recent days.

But Economist Ben May at London’s Capital Economics analysis firm says it is not all about image and confidence.  He says Italy’s debt is so high that even as the world’s eighth-largest economy it will not be able to pay all of it back, with huge regional and global repercussions.

“Clearly what has happened now is fears about Italy are growing and certainly we think there is a real chance it might have to default to get its debts down to a sustainable level," said May.

Italian-born political economist Leila Simona Talani of London’s King’s College says such concerns are unwarranted.

“I do not think it is unsustainable," said Talani. "I know that non-Italians have the feeling that it is not possible to handle such a huge debt.  It is a huge debt.  Italians know, however, that this debt is financed by Italians, and is very likely to keep on being financed, even in a higher percentage than before, by Italians.”

But the European Union is imposing tough conditions on continued financing of the troubled economies, and insisting on tighter monitoring.

Already, austerity plans are causing social unrest, particularly in Greece.

Even in Britain there have been demonstrations, including one this week by students protesting higher tuition fees caused by government spending cuts designed to avoid an Italian or Greek scenario.

Some experts are concerned about an austerity-based approach that could lead to many years of recession in some countries, and have begun to call for targeted spending to stimulate growth.

“You lost competitiveness," said Talani. "You lost productivity.  So you have to invest in these.”

And that is a tough thing for European leaders to contemplate as they focus on reducing debt and convincing banks and investors that, with help, troubled countries can live within their means.

You May Like

DRC Tries Mega-Farms to Feed Population

Park at Boukanga Lonzo currently has 5,000 hectares under cultivation, crops stretching as far as eye can see, and is start of ambitious large-scale agriculture plan More

Video Survivor Video Testimonies Recount Horrors of Guatemalan Genocide

During a conflict that spanned more than three decades, tens of thousands of indigenous Mayans were killed More

Video War, Drought Threaten Iraq's Marshlands

Areas are spawning ground for Gulf fisheries, a resting place for migrating wildfowl, source of livelihood for fishermen and herders who have called the marshes home for generations More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Nobel Prize Winner Malala Talks to VOAi
X
August 31, 2015 2:17 AM
Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.

VOA Blogs