Trouble in euroland amid record growth

By Jonathan Charles
BBC News

image captionConstruction worker Doney Ramirez was left high and dry when his Spanish employers went bust

The eurozone seems to be recovering, with Germany reporting record growth and Greece meeting the ongoing conditions of its bailout package - but the hard times are not over for European workers.

Doney Ramirez is 12m (40ft) off the ground, conducting a one-man protest, high up in the air.

He is one of the victims of the trouble in euroland - the crisis affecting the currency shared by most of the European Union's member states.

Mr Ramirez was a construction worker on a building site in the Spanish capital, Madrid.

Recently, the construction company went bust and he and all his friends were told that they would not be paid.

So he broke in to the site and scaled the crane. And that is where he has stayed for the past four months. He says that he is not coming down until he gets his wages.

Former colleagues winch food up to him every day. His only contact with the people below is by phone.

"I know that it is really hard for my family, that I am here. I have an aim, though. When I come down, it will be with my head held high and very proud of what I have done," Mr Ramirez says.

His three children miss him.

His nine-year-old son, Juan, says: "I worry about how he will survive the cold at night and the heat by day. I sent him a Father's Day card with a drawing of the two of us playing together in the park."

As one of the BBC's Europe correspondents for more than 15 years, I criss-crossed the continent following the preparations and then the launch of the euro.

Returning to Europe to make this documentary for BBC Radio 4, I wanted to find out whether people's views had changed about the project which was meant to unite the continent, and to see whether this crisis had its roots in mistakes made back to the 1990s.

In retracing my steps, I have heard many stories of hardship.

Doney Ramirez is suffering because Spain is one of the euro member states whose actions have weakened the currency.

Along with Greece, Portugal and Ireland, it built up big debts and that has frightened investors, who sold the euro on the foreign exchanges.

The governments and construction companies, like the one that employed Mr Ramirez, borrowed too much money when it was cheaply available. And when the cash ran out, so did their time.

The fault lines go back to the 1990s. All the countries that wanted to join the euro when it was launched in 1999 should have obeyed the conditions set out in the Maastricht Treaty.

image captionGovernment spending cuts in Greece provoked riots, as protestors tried to storm parliament on May Day

The treaty limited the amount of debt that any country could have. In the end, most nations fudged that rule, which was supposed to enable only strong nations to enter the currency.

The former chief economist at the German Bundesbank and European Central Bank, Otmar Issing, is famous for joking that putting governments in charge of policing their own debt is like giving alcoholics the key to the bar.

"The temptation is always there, so you need sanctions," he tells me. The trouble was that the sanctions were never tough enough.

So now governments like the one in Mr Ramirez's Spain are belatedly taking action to get rid of their debts.

But some worry that cutting public spending now, so drastically, may end up depressing the already recession-hit economy still further.

"I hope Spain will turn from a spendthrift economy into a private economy," says Pedro Schwartz, who wrote a book about the euro. But he says he would rather see his dream put on hold, for now.

"That is what I hope will happen in the next couple of years -but not next year," he says.

It is an issue which is also confronting Greece, Ireland and many others.

The challenges faced by the four most troubled member states are a stark contrast to economic life in the biggest, Germany.

Businesses there have become more competitive in the euro. They have borrowed less, invested more and cut costs. Their workers have not had an increase in their standard of living for years.

Now they say, "If we have made sacrifices, why haven't others?"

There could be more sacrifices to come for Germans. They might now have to transfer money to their less-well-off southern partners to deal with the debts.

A fund of hundreds of billions of euros has been set up by the European Union - Greece is already getting help.

So will the euro survive? I have talked to many leading figures and I think the political will is there. European leaders have come too far to fail now.

The former prime minister of the Netherlands, Wim Kok, who negotiated the Maastricht Treaty in 1991, is clearly worried though.

image captionSome Germans have protested about making sacrifices to benefit Greece

"We are not out of the woods yet. I cannot say: 'Please go to bed and sleep well and it will be nice in the morning.' It is still not over."

Perhaps surprisingly, one of his more trenchant critics at the time of the 1991 Maastricht negotiations is more certain that the euro is likely to come through this.

Britain's then chancellor of the exchequer, Norman Lamont - now Lord Lamont - told me that he believes EU leaders will move Heaven and Earth to save their project.

If it does go down though, he thinks the crisis might even serve a useful purpose.

"It would have very serious implications for the European Union.

"I think that it would not be a bad thing, however, if we were forced to rethink what the European Union is for, which bits of it are desirable and which bits are unnecessary."

For Doney Ramirez, high up on his crane in a Madrid suburb, the words of politicians seem very remote.

Whatever happens to the euro in the months and years ahead, he has already paid a high price for its failings.

Trouble in Euroland will be broadcast on BBC Radio 4 on Tuesday 24 August at 2000 BST, or afterwards via BBC iPlayer.

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