March 1, 2013 by Conn M. Hallinan
On the eve of the World War I the British diplomat Sir Edward Gray is purported to have said, “The lamps are going out all over Europe.” In the wake of the recent Italian election one might reverse that phrase: after years of brutal austerity, collapsing economies, widespread unemployment and shredding of the social welfare net, Italians said “basta!” “Enough!” And lamps are going on all over Europe.
Slovenians just turned out their conservative government and handed the reins to Alenta Bratusek, who compared austerity to “medieval medicine.” Tens of thousands of Bulgarian demonstrators forced their austerity-addicted government to resign. Support for the ruling parties of Spain and Portugal, which have overseen higher taxes and massive cutbacks, has dropped precipitously. German Chancellor Angela Merkel’s conservative Democratic Union took a beating in local elections. France’s Socialist Party rode an anti-austerity program to victory, and the leftist Syriza Party in Greece is now the most popular in that country.
Nowhere in Europe, however, has the austerity policies of the “troika”—the European Union (EU), the European Central Bank, and the International Monetary Fund (IMF)—taken such a thorough shellacking as in Italy. Prime Minister Mario Monte’s government of technocrats, who piled on regressive taxes, cut pensions, slashed jobs, and dismantled social programs, was crushed, while parties running on anti-austerity platforms swept the field.
December 13, 2012 by Binoy Kampmark
The German armaments industry has a good reputation for doing what it does best – exporting high grade and stylistic means of killing well. But during the Merkel years, a trend has emerged in what has come to be called the Merkel Doctrine. Der Spiegel took note of this in July last year. The case in question involved Saudi Arabia, and the relevant sale of 270 modern Leopard (Model 2A7) tanks. No reasons were given for the policy shift, and none have been forthcoming.
“This would be the first time Germany supplied heavy arms to an Arab government that has declared its intentions to fight its opponents ‘with an iron fist’, a country that deployed tanks against demonstrators in a neighbouring country and ranks 160th on the Economist’s Democracy Index, just a few spots above North Korea, which holds the very bottom spot,” Holger Stark writes in Der Spiegel.
October 29, 2012 by Binoy Kampmark
“The fundamental defect of Mr. Berlusconi’s governing style is that he often confuses private interests with public ones.”
– The Economist, Jun 9, 2011
Saviour and buffoon, makeup demagogue and extremist. He is the sort of character one misses because of his enormously negative potential, thinking that monochrome politics might be a worse option. But the conviction of Silvio Berlusconi by a Milan court for tax fraud last week, labelled political homicide by members of his own party, is yet another page turner in Italy’s sordid political drama.
September 13, 2012 by Marshall Auerback
Germany’s Constitutional Court gave a green light on Wednesday for the country to ratify Europe’s new bailout fund, boosting hopes that the single currency bloc is finally putting in place the tools to resolve its three-year old debt crisis.
In an eagerly anticipated ruling that has had investors on tenterhooks for months, the court in the southern city of Karlsruhe insisted the German parliament be given veto rights over any increase in Berlin’s contribution to the 700 billion euro European Stability Mechanism (ESM). There were strings attached to its endorsement of the ESM and a separate European pact on budget rules, and a relief rally has occurred as another apparent impediment to a euro “solution” appears to have been eliminated.
July 24, 2012 by Binoy Kampmark
Chancellor Angela Merkel has a plateful of matters to deal with, most of them of an economic nature. Europe is stuttering and staggering, and the Dame of Austerity is finding herself with fewer friends by the day. With the recent decision by the regional court in Cologne disapproving the legality of circumcision for underage boys, a storm has erupted that has given her another issue to worry about. The debate may never have taken place had the doctor who performed the circumcision on the couple’s child not been charged with bodily harm. The Chancellor’s sentiments were recorded in the Bild daily: “I do not want Germany to be the only country in the world where Jews cannot practise their rituals.”
“Otherwise we will become a laughing stock,” Merkel continued rather emphatically.
June 28, 2012 by Marshall Auerback
George Soros probably understands the nature of the immediate problem facing the Eurozone. Namely, the accelerating bank run which, amongst other things, potentially exposes Germany to trillions of contingent euro liabilities. But even Soros reflects the prevailing – and mistaken – view that Greece might need to become the sacrificial lamb required to save the euro. He said as much in a recent interview in Der Spiegel.
Questioned about his proposal to rescue the European Monetary Union via a Debt Reduction Fund, Soros was asked whether this measure could also save Greece.
June 27, 2012 by Justin Vaïsse
Not since Charles De Gaulle has a French president confronted an economic and international situation as tumultuous as the one faced by François Hollande.
François Hollande, who took over the presidency from Nicolas Sarkozy last month, is facing an unemployment rate in the double digits and a national debt that stands at 90% of GDP. In addition to his domestic challenges, François Hollande finds himself at the center of a deepening European crisis, with Greece on the brink of collapse and most euro-zone countries in a recession. While the challenges facing the new president are enormous, there seems to be little consensus on how he will govern.
June 26, 2012 by George Grevett
The pattern is becoming despairingly familiar. The embattled periphery countries, led by Italy and Spain but also endorsed by France, propose more fiscal integration in the form of mutual debt pooling and shared financial liability. Such reforms are met with resounding rejections from Germany who instead point to the long run benefits of austerity in terms of promoting a sustainable economy.
Similar responses are also reserved for Greece who is seeking to renegotiate elements of its bailout agreement following a recent general election which resulted in the formation of an awkward coalition government.
June 25, 2012 by Marshall Auerback
European financial officials are preparing their policy package to deal with the current crisis for the meeting scheduled next week. It is not clear whether any of the proposals will be able to stop the ongoing bank run. Here are some of the rumored proposals:
* Euro members jointly issue short term bills – in effect, short term euro bonds.
* A debt redemption fund as proposed by economic advisors to Merkel.
* New procedures for euro area banking supervision.
* Using the ESM to purchase peripheral nations’ bonds in order to reduce their sovereign interest rates.
French President Hollande is advocating the ESM purchase program. He is also advocating that the ESM be given a banking licence linked to the European Central Bank’s balance sheet. This makes sense as it addresses the solvency issue.
June 23, 2012 by Dominique de Wit
The largest United Nations’ conference to date took place in Rio de Janeiro, Brazil from June 20th to the 22nd to discuss the world’s path toward sustainable development. The conference was a follow up to the historic 1992 United Nations Conference on Environment and Development (UNCED), also known as the Earth Summit that was held shortly after the dissolution of the Soviet Union, at a time that the world was radiant with hope for reform and cooperation within the international community.
At the 1992 Earth Summit, the principal concept implemented was that of “sustainable development,” a global policy initiative designed to restructure economic growth, advance social equity, and ensure environmental protections for current generations, as well as for those to come. Unfortunately, the last twenty years have not demonstrated the desired implementation of sustainable development among states. Sustainability issues, such as climate change, biodiversity loss, access to basic necessities, and poverty remain existent.
The Rio+20 conference presented an opportunity to reassess the commitments made two decades ago and formulate alternative solutions to pressing social and environmental problems that have become ever more urgent.
June 19, 2012 by Marshall Auerback
So for the short term, it appears we won’t have a “Grexit”, which has led many commentators to suggest (laughably) that a crisis has been averted. Typical of this sentiment is a headline in Bloomberg today “Greece avoids chaos; Big Hurdles Loom”. To paraphrase Pete Townsend, meet the new chaos, same as the old chaos.
It is worth pondering how acceptance of the Troika’s program (even if cosmetic adjustments are made) will help hospitals get access to essential medical supplies (see here), whilst the government persists in enforcing a program which is killing its private sector by cutting spending and not paying legitimate bills, and an unemployment rate creeps towards 25 per cent and 50 per cent for youth.
June 17, 2012 by George Grevett
This week Italy was carted into the spotlight of the Eurozone crisis as its benchmark 10 year borrowing costs moved above 6 per cent for the first time since January and with Italy now beginning to suffer as contagion spreads from the currency block’s other problem areas it is clear that tensions are rising in the Euro area.
In a further sign of disunity between the Eurozone’s Latin bloc and other EMU member states on Tuesday, Italian Prime Minister, Mario Monti, was forced to reject claims from the Austrian Finance Minster that Italy would require financial assistance. Italy is now seen as the final battleground of the euro project with any bailout for Italy likely to be the final nail in the coffin of the Eurozone.
June 13, 2012 by Marshall Auerback
Hans-Werner Sinn, President of Germany’s Ifo Institute and the Director of the Center for Economic Studies at the University of Munich, has taken to the pages of the New York Times to explain why Berlin is balking on a further bailout for Europe.
Amongst the points that Sinn makes against German sharing in the debt of the euro zone’s southern nations is a legal one: “For one thing, such a bailout is illegal under the Maastricht Treaty, which governs the euro zone. Because the treaty is law in each member state, a bailout would be rejected by Germany’s Constitutional Court.”
May 21, 2012 by Marshall Auerback
Given the German electorate’s long standing aversion to “fiscal profligacy” and soft currency economics (said to lead inexorably to Weimar style hyperinflation), one wonders why on earth Germany actually acceded to a “big and broad” European Monetary Union which included countries such as Greece, Portugal, Spain and Italy.
Clearly, this can be better understood by viewing the country through the prism of the Three Germanys: Germany 1 is the Germany of the Bundesbank: the segment of the country which to this day retains huge phobias about the recurrence of Weimar-style inflation, and an almost theological belief in sound money and a corresponding hatred of inflation. It is the Germany of “sound finances” and “monetary discipline”. In many respects, these Germans are Austrian School style economists to the core. In their heart of hearts, many would probably love to be back on an international gold standard system.
Germany 2 is the internationalist wing of the country, led by Helmut Kohl. Kohl and his successors are probably the foremost exponents of the idea that Europe can rid itself of the “German problem” once and for all if Germany firmly binds itself to a “United States of Europe” and continues to construct institutions that broadly move the EU in this direction.
May 20, 2012 by Deepak Tripathi
Recent elections in France and Greece have generated a good deal of comment, suggesting that the years of center-right governance in Europe may be coming to an end. The defeat of President Nicolas Sarkozy of France by the Socialist candidate Francois Hollande, and the collapse in Greece of political parties that allowed unrestrained capitalism and chaos to take hold, are major developments. But whether they represent a turning-point likely to return Western Europe to social democracy cannot yet be taken for granted.
Certainly, public opinion has become radicalized to an alarming degree. European societies are undergoing a process of atomization as confidence in mainstream political parties and their leaders collapses. In the midst of a severe continental crisis, millions upon millions of people feel that their leaders are both unwilling and unable to look for solutions to help the most vulnerable.