More and more European states are implementing sweeping austerity plans. On 8 March, Portguese Prime Minister José Socrates presented a "programme for stability and growth", whose main feature will be a drastic reduction in public spending. Two days later, Greece was paralysed by a general strike in protest against a fiscal plan pushed through by Georges Papandréou's government in response to pressure from financial markets and European partners. Countries like Ireland, Spain and Hungary have already been forced to accept deep budget cuts and, in view of their vulnerability to similar crises, the United Kingdom and France may also have to follow suit.

National governments are facing hard times. Like the plague-stricken animals in the fable by Jean de Lafontaine, "not all are destined to die, but all will be struck down." Regardless of whether or not they are members of the euro zone, and regardless of their political colour —socialist or liberal — all of them will have to redefine the nature of a European social model that attempts to establish a balance between the demands of competitiveness and social justice. And this task will be made all the more urgent by the mood of their populations, which will not accept austerity if nothing is offered in return.

It is therefore not surprising that Europe has launched an attack on speculators. In a joint letter, Nicolas Sarkozy, Angela Merkel, Jean-Claude Junker (President of the Eurogroup) and Georges Papandréou have requested that the European Commission investigate the impact of speculation. At the same time, the European Parliament and parliaments in Europe's member states are discussing methods of exercising stricter control on the actions of hedge funds.

Markets will have to be regulated without endangering the capacity of states to finance economic recovery - a balancing act that Süddeutsche Zeitung has described as "a tightrope between good and evil." However, governments will also have to walk another tightrope to ensure that initiatives to restore order in their economies take due account of the increasing difficulty faced by a large section of the European population. When the activity of speculative funds results in economic destabilisation and speculative excesses fuel a shift towards extremist political parties, governments can and should come together to defend their societies. Eric Maurice

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