Western European News Digest

Hyperinflation Increasing Social Tensions, Strikes

Jan. 3 (EIRNS)—A driver in the ferment for a mass strike throughout Europe, is the personal experience of deep cuts in their household budgets which millions of citizens and labor union members have suffered, with the beginning of hyperinflation. Especially the lowest-income people, those who might have been able to put aside 20, 30, or 40 euros a month for extra expenses, see that margin wiped out by the price increases for food and gasoline, in the last couple of weeks. It is estimated by social welfare agencies, many of which also run soup kitchens in the bigger cities, that about 600,000 Germans, many of them children, can no longer even cover their daily needs.

In France, the "throwaway" paper Metro forecast that retail prices for dairy products will increase between 5% and 10%, as milk producers reportedly will be paid 37% more compared to 2007. Health-care costs will rise, with an excise of an extra EU50 cents to be imposed on each container of pharmaceutical medications, and an extra 2 euros for each medical transport, exempting only those on welfare.

Family allowances will rise only 1-2%, increasing the fall in the standard of living.

Strike Ferment in Germany

Dec. 31 (EIRNS)—Statements by German Foreign Minister Frank Walter Steinmeier, a leading member of the Social Democratic Party (SPD) executive, caused sparks to fly in the German media, when he called for significant wage increases on Dec. 30. He said that it is about time that wages catch up with the giant salary increases for corporate managers, in recent years. Steinmeier's remarks have to be seen in connection with a building ferment for mass strikes, which the Social Democrats simply have to respond to positively, or risk losing significant constituencies to the leftist Linkspartei, which is reaping a harvest of frustrated SPD voters with populist sloganeering. The SPD is at risk of falling below 20% of the popular vote.

(See InDepth for a report on the strike of the railway engineers, and the re-emergence of an "FDR impulse.")

Miners Strike Averted in Poland

Jan. 4 (EIRNS)—On Jan. 3, Polish mineworkers reached a last-minute agreement, just hours before their strike deadline. The workers won their desired 14-15% wage increase. This averted a potentially serious test for the newly elected government. Not only is coal mining a source of income for many Poles, but 96% of the nation's electricity comes from coal as well, which would have quickly involved the nation as a whole in the crisis. The population generally supported the labor union. Last month, when 400 out of 2,400 miners occupied their mine in the southern Polish city of Ornontowice, 40,000 more mining workers joined them in a sympathy strike, and the strike vote taken since, has yielded overwhelming support, in spite of sabotage attempts by some more right-wing unionists.

Next to shipyard workers, miners are rated as the vanguard of the Polish labor movement, so a strike in the mines could rapidly lead to protests or strikes nationwide (in the hospitals and railways, for example).

Basel II Accords Put Banks in Stranglehold

Jan. 2, (EIRNS)—New international banking regulations for European banks, referred to as "Basel II" and issued by the Bank of International Settlements (BIS), took effect on Jan. 1. These changes, which were concocted to make access to credit easier for speculative operations, are already backfiring on the incompetents who believed the boom could go on forever.

A Bank of England report warns that the new rules will make the banking system more unstable. As credit risk materializes and borrowers are downgraded, the banks' capital requirements will rise, worsening the credit crunch. "A systemic tightening in credit supply may in turn increase financial pressures on companies and households and deepen, or prolong, a downturn," the report says.

British Empire Hopes the U.S. Will Crumble in Chaos

Dec. 28 (EIRNS)—"The dollar might no longer be the source of the U.S.'s power, but instead a factor in its decline," was the conclusion commentator Daniel Dombey cheerily reached in his column in the Dec. 28 edition of the City of London's mouthpiece, the Financial Times.

Asking whether the dollar's decline could "undermine Washington's place on the international stage," rather than just being confined to the financial world, Dombey answered his own question by presenting, and implicitly supporting, the sophistry of Council on Foreign Relations' official Ben Steil. Lyndon LaRouche had attacked Steil on April 30, when he called for replacement of sovereign currencies with three world currency blocs, which would ultimately be run by the British. That proposal, LaRouche said, was an attempt to destroy nations and to revive the "Persian Model" of a "concert of global empires."

Italy: Uproar Over Sellout of Alitalia

Dec. 29 (EIRNS)—The Italian government announced the opening of negotiations with Air France to sell the financially distressed national air company, Alitalia. Northern politicians and business factions are enraged because they fear that Air France will downsize the Milan Malpensa airport hub. The trade unions are also against it: CISL leader Raffaele Bonanni accused the government of selling out a national asset. "They are dismantling the domestic transportation system while Air France takes away our best international slots and downsizes maintenance. Damage worse than Napoleon's art thefts.... Why did the government not buy into the Alitalia capital? Spain has done everything possible to keep [Air] Iberia, and we sell out."

More Signs of Brown Being Eased Out

Dec. 30 (EIRNS)—Britain's Conservative Party evidently sees the rocky performance of Prime Minister Gordon Brown, especially since last Fall's run on Northern Rock bank, as the best chance for its own political fortunes, but criticism of Brown comes from within his own party, as well. The right-wing London Daily Telegraph (also known as the "Torygraph") quotes David Milliband, Brown's foreign secretary, advising Brown to counter the perception that he "had run out of steam" and had "lost the will to fight."

Conservative Party leader David Cameron has branded Labour "second rate" and "hopeless" in key policy areas, including the economy, management of the National Health Service, and education, and he accuses Brown's Cabinet of being "exhausted," reports the Telegraph. Cameron, instead, offers a "vision for the future" and a "fresh start on policy after so many years of Labour headline-chasing short-term tricks with no real substance behind them." The Tories are not only ahead of Labour in the polls, but Justice Minister Jack Straw admits that Cameron's "messages have been resonating" with voters.