As he traveled across the European continent, President Aquino told people back home that he was on a fruitful trip of economic significance. The man on the street, who had seen the ancientness and grandeur of Paris and Madrid on TV screens, largely agreed. Europe, the major destination of our hardworking domestic helpers, is, by our reckoning the other land of milk and honey. The US, of course, is first and foremost.
Yet, Europe, from where Mr. Aquino promised to return with “a long list of accomplishments” is no longer the Europe of prosperity and economic stability. He can’t bring home anything from there, given the region’s prostrate economy. “Europe is at risk of secular stagnation,” Lawrence Summers, one of the world’s top economic minds, wrote recently. Summers was treasury secretary to Bill Clinton, former top economic adviser to President Obama and former president of the World Bank and Harvard University.
Summers has called for dramatic solutions to the woes of Europe so as to prevent vicious cycles of sluggish growth.
Unemployment across the continent remains at a tough 11 plus, a double-digit menace that is higher in Spain and Greece. In the second quarter, the 18 nations that use the Euro as a common currency failed to register any growth while the largest economy of the continent, Germany, an economic powerhouse, contracted. Angela Markel, who leads the largest economy, has stubbornly clung to her position that only austerity and fiscal restraint will save Europe.
Eurozone GDP has yet to get back to the level in 2007, before the lesser depression struck.
In contrast, the US, which implemented a timid stimulus package and has continued with monetary easing through its QE, has trimmed down its double-digit unemployment rate to just above 6 percent. While the US economy has been posting growth rates, though insignificant, Europe, according to economists, is about to plunge into a dangerous deflation. Luckily, the so-called “austerians” or the advocates of tight money and fiscal cuts are out of power.
“At this point, Europe is doing worse than it did at a comparable stage of the Great Depression. And even more bad news may lie ahead, as Europe shows every sign of sliding into a Japanese-style deflationary trap,” wrote Nobel prize winning economist Paul Krugman, who has also criticized the austerity policies that has dominated the economic policies across the region.
In July, inflation was down to 0.4 percent and industrial production was down 0.3 percent in June. Portugal, part of the PIGS (Portugal, Ireland, Greece and Spain), the Eurozone countries hard hit by the meltdown, had to bail out one of its largest banks recently.
With all these data, it is just right to ask this question. What precisely will Mr. Aquino get from a region on the throes of deflation and in which youth unemployment is over 20 percent in many of the 18-bloc Euro nations?
Given that our strongest economic suit is manpower export, it is imperative for any Philippine president to push for the placement of Filipino skilled, non-skilled and sea-based workers during their foreign travels. Preferably through bilateral labor agreements which give both employment and protection—once employed—to Filipino workers.
But how can any leader do that in Spain, which right now has one of the most horrific unemployment rate in the developed world? Before 2008, getting workers into Spain was possible as the economy was booming and unemployment was low. Right now that is not the case. Natives are pounding the streets to get menial jobs and the unemployed youth are restless and aggrieved.
The tensions in Europe are mostly fueled by restless and angry natives who feel that immigration should be restricted and that the immigrants have been stealing jobs from them, or destroying their traditional way of life.
The rise of the right-wing parties in Europe such as France’s National Front (FN) is partly due to the sense of intolerance that is now gripping these formerly welcoming member-nations. Right-wing figures previously dismissed as clowns have made their amazing comeback due to the meltdown that is roiling the region.
The welcome for Mr. Aquino in Paris might had been “rousing.” But France had nothing to offer to Mr. Aquino except its own misery.
With manufacturing down in the continent, what products and raw materials can we hopefully export to them? What goods and services from us could probably enter their markets with consumer spending at record-low?
In France, the economy is as messy as the personal life of its president, Francois Hollande.
His socialist government has caved in to the pressure from Merkel on the adoption of austerity measures and it is only at this late stage that he is reconsidering on the brutal wages of his austerity policies.
There is no way Mr. Aquino could have squeezed economic concessions from either Spain or France.
We don’t mind the P31.9 million spent by Mr. Aquino and his party for the 8-day trip to Europe. Presidents have to travel to broaden their worldview and they have to have delegations in these travels.
But it would be the height of insensitivity on his part to proclaim that he went there for his “ bosses,” which means the ordinary people like me and my neighbors. Telling the people that he would bring home the bacon from Europe was an outright lie as you cannot, under any circumstance, squeeze concessions from an economy about to plunge into a deflationary trap.
He should have simply said that presidents have to travel and that they have to see sights and hobnob with other leaders. That is something that we can fully understand and accept.