By Luke Baker, Reuters

Europe has spent hundreds of billions of euro rescuing its banks, but
may have lost an entire generation of young people in the process, the
president of the European Parliament said.
Since the region’s debt crisis erupted in Greece in late 2009, the EU
has created complex rescue mechanisms to prop up distressed countries
and their shaky banking sectors, setting aside a total of €700bn.

But little has been done to tackle the devastating social impact of
the crisis, with more than 26m people unemployed across the EU,
including one in every two young people in Greece, Spain and parts of
Italy and Portugal.

That crippling level of unemployment has led to protests and outbreaks
of violence across southern Europe, raising the threat of full-scale
social breakdown, including rising crime and anti-immigrant attacks
that can further rattle unstable governments.

“We saved the banks but are running the risk of losing a generation,”
said Martin Schulz, a German socialist who has led the parliament, the
EU’s only directly elected institution, since January last year.

“One of the biggest threats to the EU is that people entirely lose
their confidence in the capacity of the EU to solve their problems.
And if the younger generation is losing trust, then in my eyes the EU
is in real danger.”

Figures released last week showed 57% of Greeks aged 15 to 24 are out
of work, and a similar scourge is tearing apart the fabric of Spain,
where some university graduates in their 30s have never had a job.

EU heads of state and government will discuss the fallout from the
debt crisis at a summit on Thursday and Friday.

There are plans for a “youth employment guarantee”, which would ensure
that people under 25 receive either an offer of work, further
education or work-related training at least four months after leaving
education or being employed.

That is part of a €6bn initiative to tackle youth unemployment in the
EU’s worst-hit regions and head off the prospect of life-long
joblessness. But political analysts say it is a case of too little,
too late.

Mr Schulz, 57, who began his career as an apprentice bookseller, said
he had recently taken part in a debate where he was challenged by a
Spanish woman over the issue of young people being abandoned for the
sake of rescuing wealthy banks.

“She effectively raised the question: ‘You have given €700bn for the
banking system, how much money do you have for me?’” he said. “And
what is my answer?

“If we have €700bn to stabilise the banking system, we must have at
least as much money to stabilise the young generation in such

“We are world champions in cuts, but we have less idea… when it comes
to stimulating growth.”

Over the past 40 years, rising incomes in countries such as Spain,
Greece, Italy, Ireland and Portugal have allowed families to invest
more in education, with the expectation that their children would be
better placed as a result.

The ability of young people to study and work anywhere in Europe as
part of the EU’s single market ideal was also supposed to deliver
vastly improved opportunities for all.

But instead, as a result of the banking and debt crisis that has cast
a shadow over Europe since 2008, those sunny prospects never
materialised for millions of young people.

“Greece, Spain and Italy have perhaps the best educated generations
they have ever had in their countries, their parents invested a lot of
money in the education of their children, everything they did was
right,” said Mr Schulz.

“And now they are ready to work, the society says, ‘No place for you’.
We are creating a lost generation.”

Asked how he would tackle the issue, the Socialist party leader said
it was in part about cutting bureaucracy and putting money to work
directly where it was needed.

He gave the example of Greece and investment in solar energy. If
traditional methods are followed, a decision is made in Brussels,
money is mobilised somewhere else, an investment programme is drawn
up, the money is disbursed to the central government in Athens, then
goes to several ministries, and finally ends up with a local or
regional authorities to invest.

“By that time, we are much older,” he said.

“In my mind, direct links between the EU and regional and local
authorities is more needed than ever.”

The alternative is a system that puts the social fabric of Europe
under ever greater strain, resulting in the dire youth unemployment
statistics now prevalent in Greece, he said.

“That is a threat for social cohesion, and if the social cohesion in
such countries fails, the country explodes. This is the threat for the
EU as a whole,” he said.