Economist: Europe's crisis is political, Estonia against the tide

The crisis that is bringing Europe to its knees has political rather than economic roots. This is what is claimed by a reflection present in the latest issue of the Economist, within the column 'Charlemagne'. The lack of a common and organic policy is, in fact, having a decisive impact on the situation of Greece and the other countries at risk. It is only on the occasion of emergency situations that the various leaders seek a confrontation and even in these cases they rely more on partial interventions than on prospective and farsighted solutions. For this reason, the collapse of the European economies, Greece in primis, seems to take the governments of the Union by surprise, while a carefully constructed strategy would make it possible to predict and contain the recent disasters. The inconsistency of European political choices is the main cause of the collapse of the financial markets and the consequent contagion effect. However, the eurozone itself presents an example of how, after a serious crisis, it is possible to get the economy back on track and trigger impressive growth. Again the Economist highlights how Estonia in 2009 went through an extremely critical phase, characterized by a boom in unemployment and a progressive contraction of GDP. A forward-looking policy not dictated by emergency choices has made it possible to get back on track and make Estonia the country with the lowest public debt in the whole eurozone. While today the European states are grappling with negative indicators, the growth of the Estonian GDP in the first quarter of 2011 reached 8,5%, the best figure of the whole European Union. Over the past year, unemployment has fallen from 18,8% to 13,8%, industrial production has risen by 26% and Fitch has raised the assessment of the Estonian state to A+. The decisive choice behind this authentic golden age was the adoption of a light tax regime which made it possible to attract the capital of numerous foreign companies. And also in this case there was a contagion effect, but a positive one. In fact, after the recent difficulties, Latvia and Lithuania are following the Estonian example. In the last year they have achieved significant growth rates, thanks above all to the boom in exports: +38% for Latvia and +42% for Lithuania. European governments should start studying the case of these three countries, a demonstration of how prospective choices are far more functional than interventions dictated exclusively by contingency.