The four peripheral eurozone countries – Portugal, Ireland, Greece and Spain – are often lumped together. Greece and Ireland have already received rescue packages from the EU, and Portugal is continuously on the verge of a bailout. However, these economies and their “roads to the crisis” differ considerably case by case.

Greece is the only one that can be blamed for a consistently careless fiscal policy as well as outright fraud. Although Portugal has had troubles with its public deficit since 2002 (when the country became a subject of the excessive deficit procedure for the first time in the Economic and Monetary Union), the government continuously took measures to reduce the deficit. Ireland and Spain were both spectacular success stories until 2007, with high growth rates and no budgetary problems. The financial crisis, however, brought troubles for all four countries.

Regarding the huge debt burden, a logical option is that the Greek problem should be treated separately. According to a recent study by Bruegel, a renowned think tank in Brussels, Greece would need a primary budget surplus of 8.4% continuously over the next 25 years to reduce its debt ratio to under 60% of GDP. (http://www.bruegel.org/publications/show/publication/a-comprehensive-approach-to-the-euro-area-debt-crisis.html) As this is by all means impossible, Greece would need some kind of debt restructuring as soon as possible.

In Ireland, a totally different case, the property bubble burst and the state took over large loans from the banks, thus pushing public debt up to a very high level, 100% of GDP. Last November, Ireland finally requested financial support from an EU crisis fund, the European Financial Stability Facility.

Concerning the two Iberian countries, Portuguese bond yields have been pushed up to more than 7%, and it is likely that Portugal will also have to request a rescue package. The total size of this could be around €60–80 billion, slightly less than the Irish rescue plan of €85 billion. The Portuguese government has however repeatedly rejected such claims and said that it managed to cut the public deficit even more than planned, by 7.3 percentage points in 2010. Which, by the way, was the biggest reduction in the entire eurozone. If Portugal nevertheless receives a bailout, Prime Minister José Sócrates will most probably have to step down.

In Spain, the long-lasting pre-crisis growth period was based on the construction sector and the massive inflow of immigrant workforce. Therefore, a bubble emerged on the real estate market. The savings institutes (cajas) were thoroughly involved in real estate businesses and thus accumulated considerable debt. The reorganization and mergers of the cajas has been one of the grand tasks of the government in the last few months. Meanwhile, as an effect of the crisis, unemployment jumped above 20%, including by far the highest rate of youth unemployment in the EU (41%).

In every country of the eurozone periphery, living conditions have worsened substantially since 2009, following austerity measures such as wage cuts, the freezing of pensions and increases in the retirement age and taxes. Partly because of these restrictions and partly because of the lack of new drivers of growth, there is no prospect for GDP expansion in these countries.

So, the basis of long-term growth should be found and defined in the euro area periphery.

Uniform, EU-level measures should be restricted to the short and medium term. In the longer run, growth and stability may require different methods in each country as their pre-crisis history was also different. For Spain and Ireland, relying on the construction industry, real estate and cheap loans is no longer a viable option. It would be better to invest in innovation, education and promoting the internationalization of companies. In Portugal and Greece, strong export activity could be promising.

These peripheral countries are looking for their new economic models and the European Union should help them to find their way. It takes time to recover from the crisis and adjust the economies. The EU can support them by restructuring financial aid in the common EU budget and redirecting funds towards growth-enhancing areas.

Andrea Éltető is senior research fellow at the Institute for World Economy of the Hungarian Academy of Sciences