Nicolas Sarkozy and Angela Merkel have used the wrong measures to resolve the eurozone debt crisis and thrown away the chances of recovery, former prime minister Gordon Brown said Sunday.
Brown said the French president and the German chancellor were exacerbating the financial crisis, which he said was “predictable,” in an article in The Independent on Sunday newspaper.
“Deeper economic, social and political agonies will follow as long as the eurozone avoids the big issues,” Brown wrote.
Last month’s eurozone summit “was yet another European chance of recovery thrown away, a turning point at which history failed to turn.
“And now no number of weekend phonecalls can solve what is a financial, macroeconomic and fiscal crisis rolled into one, which needs a radical restructuring of both Europe’s banks and the euro, and will almost certainly require intervention by the G2O and the International Monetary Fund.
“Although Chancellor Merkel and President Sarkozy brokered a July Brussels deal that kept Greece liquid… economic necessity was sacrificed to what was politically expedient.”
Three years of “wrong analysis” led to the “wrong conclusions” — that it was a fiscal crisis in the weaker states, whose profligacy demanded austerity, “and if that fails, even more austerity”.
Europe’s problems “threaten a tragic roll call” of widespread unemployment and a “wasted decade”, Brown wrote.
EU leaders, even now, “find it difficult to understand how the economic policy of the euro area chokes off growth, impedes recovery and leaves Europe ill-equipped for global competition.”
Brown, who was Britain’s finance minister for a decade under Tony Blair’s 1997-2007 premiership, was prime minister for three years until May 2010.
He said one of the reasons he opposed Britain joining the euro currency was that it had “no crisis-prevention or crisis-resolution mechanism and no line of accountability when things went wrong”.
Brown wrote that European leaders were “still seeking agreement on funding its first phase long after a second, bigger, phase is overdue”, and “remain unsure who is responsible in a crisis”.
“Every time the big questions are avoided, and every time the outcome is a patchwork compromise, the next crisis gets ever closer and threatens even more danger,” he concluded.
Brown also claimed the US refusal to sanction a new economic stimulus, hike taxes or slash entitlements was “choking off yet another potential engine of world growth”.