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22nd Feb 2020

Bailout austerity hurts most vulnerable, charity says

  • Greece - currently at the crux of the anti-austerity debate in Europe - stands out as a particularly problematic case. (Photo: Emiliano)

Greece has received fresh ammunition in its negotiations with creditors, as a new report about poverty in bailed-out countries paints a grim picture of the social cost of austerity.

"The people paying the highest price currently are those who had no part in the decisions that led to the crisis, and the countries worst affected are amongst those with the biggest gaps in their social protection systems," according to the latest "Crisis Monitoring Report" published Thursday (19 February) by Caritas Europa, a pan-European charity.

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The study was carried out in seven countries who were particularly hit by the crisis and/or received international financial assistance in the past years: Cyprus, Greece, Ireland, Italy, Portugal, Romania and Spain.

The report examines the situation of children, working poor, the unemployed, migrants and people with disabilities.

Greece - currently at the crux of the anti-austerity debate in Europe - stands out as a particularly problematic case.

Caritas Greece runs a soup kitchen and clothing delivery project, which has seen demand increase over the past year, both for Greek people and immigrants.

"The number of Greek people that avail themselves of the social common meals has, in the observation of Caritas Greece, increased at an exponential rate - many of these people were until recently successful freelancers but now have no money to satisfy their basic living needs," the report reads.

"Within the past year, in particular, Caritas Greece has pointed to serious reductions in both income and purchasing capacity affecting all those on low wages, including the working poor, pointing in particular to the hardship caused by increased electricity charges and transport costs," it adds.

The left-wing government led by Alexis Tsipras, elected last month, has repeatedly spoken of a "humanitarian crisis" that the bailout-linked austerity has brought upon Greece.

The Tsipras government has promised to pardon half of the debt of those who cannot afford to pay their taxes and focus on the rich tax-evading Greeks.

A total of €76 billion in unpaid taxes and social contributions is due to the Greek state. "But realistically speaking, only about €9 billion can be clawed back," finance state secretary Nadia Valvani said on Wednesday.

Debt relief, however, runs against the requirements linked to the current bailout that eurozone partners want Greece to extend beyond its 28 February expiry date.

A loan extension request is expected on Thursday, but it remains unclear how much of the austerity requirements the Tsipras government will subscribe to.

According to the Caritas report, Europe needs to shift away from its focus on austerity.

"The evidence collected in this report, and in previous reports in this series, leads us to again conclude that the policy of prioritising austerity is not working for Europe and to urge again that alternatives be adopted."

"This runs counter to the mainstream narrative that the policies co-ordinated from Europe and enshrined in Europe’s new governance structures are working and that more austerity is what is required - but when the situation is examined from the perspective of the vulnerable people of Europe it is impossible to agree," says the report.

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